UK fashion sales suffer in latest month says BDO
When you receive a monthly retail sales release titled “sales spooked in most horrific October on record,” you know that the news isn’t going to be good.
And it certainly turned out that way. On Friday morning, the October BDO monthly sales tracker was the latest piece of evidence to show that UK retail was in a bad way last month and that fashion retail was among the categories to suffer the most.
The data showed that the UK’s high streets had their worst October in a decade. Overall comparable sales fell by 5.2%, the biggest year-on-year drop for the period as fashion sales were hit hard.
Fashion dropped even more than the retail sector as a whole with a 7.9% fall that was, again, a worst-ever result.
Comparable sales of lifestyle goods slipped by -0.1% in October despite a boost in week three as Chinese visitors flooded in during China's “Golden Week” holiday season. And homewares dropped by 0.5%.
Once again, online sales provided some light relief from all the gloom, although in many ways they were also the cause of much of the gloom as shopping is shifting from stores to websites. They grew by 22% in October, peaking at 33.9% up year-on-year in the third week of the month.
So what actually happened last month and why? Well, unusually warm weather meant that the relatively healthy spending on cold weather knits, coats and boots went into reverse, further underlining the fact that consumers now fashion shop for the moment rather than planning too far in advance.
Sophie Michael, Head of Retail and Wholesale at BDO LLP said that the
continuing pressures on disposable incomes, combined with a drop in consumer confidence, also hit sales during the month.
Consumers resisted spending in October following the rise of the Consumer Price Index (CPI) to 3% in September. Recent confidence barometers have also suggested a creeping decline in economic and spending confidence amongst consumers. As wage increases continue to be outstripped by higher inflation, and with the anticipation of higher mortgage payments following the first interest rate rise in a decade, “then it comes as little surprise that people are tightening their belts prior to the anticipated Christmas expenditure.”
Sophie Michael added that “we may see a real polarisation of winners and losers on the high street in 2018 or in the near future.” That’s because “with margins already tight and Black Friday looming, retailers will be working even harder at promotional activity and product differentiation to convince the reluctant shopper to spend with them.”
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