MNI REALITY CHECK: UK Summer Season To Underpin Retail Sales

UK retail sales likely rose modestly in July, extending a marginal increase seen in June, with clothing sales reviving as social events return to the summer calendar, key industry leaders told MNI.

Helen Dickinson, the CEO at the British Retail Consortium said July continues to see strong sales, albeit at a slower pace as lifting restrictions didn't bring an anticipated in-store boost. However, "with social events back on for the summer calendar, formalwear and beauty all began to see notable improvement," she said.

Andrew Goodacre, chief executive at the Independent Retailers' Association, said the consumer remained active, although beginning to spend on "non-retail items [such as holidays and restaurant meals] and spreading their expenditure more widely".

"Naturally, that's taken away some of the cream we've seen on retail," he noted.

SUMMER SEASON

Underlining the returning 'summer season', clothing sales likely rose by a double-digit annual rate, according to insiders, a welcome revival for one of the retail sectors hardest hit by the pandemic.

"Clothing has been up for the first time [by an annual rate of 13%]. Other categories are still negative [year-on-year], but not as negative as they have been, " according to Andy Mulcahy, strategy and insight director at IMRG.

Paul Martin, KPMG's UK head of retail said clothing continued its revival across the board, with "strong growth in-store and online". Many other non-food categories had a less strong performance, "especially those related with the home after the house moving frenzy of recent months started to abate," he said.

FINALS

Food sales are a wildcard in the July data, after a whopping 4.2% rise between May and June as shoppers stocked up on snacks and alcohol for the start of the European football championships.

England – along with Wales and Scotland played more games in the month of June than in July, which could suggest lower sales of alcohol and snacks in July, although England's participation in the latter stages of the tournament may have brought in more hungry and thirsty viewers.

"As well as the Euro 2020 football tournament, the UK experienced two exceptional weeks of hot weather in July, providing ample opportunities for shoppers to celebrate with food and drink," said Susan Barratt, chief executive at IGD.

Internet sales continued to slide after a 4.7% monthly fall in June. However, after double-digit annual declines over the first two weeks of the month, transactions slipped just 2% in the third week, despite the complete reopening of the economy of 19 July. That relative outperformance was most likely due to the so-called 'ping-demic', in which huge swathes of the work force were forced to isolate after coming into contact with Covid sufferers.

Sales of food and drink could have seen a shift to bars and restaurants as the football continued, according to Fraser McKevitt at Kantar, with instore sales down.

"Other high-flying categories suffered in July, with sales of electronic equipment trailing off as workers prepare to return to offices. Sales of home and garden equipment remained sluggish, after a 10.9% fall between May and June, with supply constraints cutting into available stock," he added.

City analysts forecast a 0.3% gain between June and July, after a higher-than-expected 0.5% m/m improvement in June, and a 1.4% decline in May.