Retail sales growth slumps in October as consumers remain cautious
Retail sales growth dipped in October due to pre-election anxiety, the latest figures have shown.
According to the British Retail Consortium (BRC)-KPMG sales monitor, retail sales in the UK increased by 0.6 per cent year over year in October, compared to 2.6 per cent growth in October 2023.
Food sales nudged up 2.9 per cent year on year compared with growth of 7.9 per cent last October, and below the 12-month average growth of 4.1 per cent.
“After a good start to autumn, October’s sales growth was disappointing. This was part driven by half term falling a week later this year, depressing the October figures, and November sales will likely see more of a boost,” Helen Dickinson OBE, chief executive of the BRC, said. “Uncertainty during the run-up to the Budget, coupled with rising energy bills, also spooked some consumers.”
“After a painful Budget for retailers, the hope is it will be less painful for households in the immediate term and consumer appetite will pick up in time for the Black Friday sales and festive season,” Dickinson added.
The BRC’s figures are even lower than the BDO’s, which found that in-store sales grew by 1.7 per cent year over year in October, while total sales—both in-store and online—grew 4.1 per cent.
Despite the higher figures, BDO agreed that October was a weak month and suggested their strong comparatives from an exceptionally poor golden quarter in 2023 “mask[ed] the true performance” of the sector.
Consumer confidence fell to its lowest level this September after concerns about the Budget clouded the outlook for households.
October’s consumer confidence figures are due next week, although it is likely that any post-budget uptick in confidence will materialise until November’s figures.
Yesterday, BDO warned that the festive period would be “exceptionally tough” for retailers, with the extra cost burden adding to the already difficult sales environment.
BDO predicted that the budget policies, plus the additional costs from implementing the new Employment Rights bill, will add more than £2.5bn to the sector’s annual bill.
Black Friday: Retail’s ‘first real test’
Black Friday, which falls on November 29 this year, will be the first big event of the golden quarter’s calendar. It will be followed by Cyber Monday on December 2, after which Christmas spending should be in full swing.
Boxing Day has traditionally been another key event in the quarter. Still, shoppers have increasingly been shifting away from in-person sales on the day and more retailers have been offering workers time off instead.
“The promotional weeks around Black Friday will be the first real test of post-Budget consumer sentiment, with retailers looking to electronics promotions and new AI-linked products to build on the computing and mobile phone sales growth that has been one of the better areas of sales performance in recent months,” Linda Ellett, UK Head of Consumer, Retail and Leisure at KPMG, said.
Last year, total sales during Black Friday soared to an estimated £13.3bn, marking a notable 7.3 per cent increase from the previous year, according to business communications provider Esendex.
“Retailers can expect a robust turnout this Black Friday as consumers look to leverage discounts in response to financial stress.
“The willingness to wait and research potential sales illustrates a shift in consumer behaviour that retailers must adapt to in order to effectively capture market share during this crucial shopping period,” Richard Hanscott, CEO of Esendex, said.