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Retail reacts to June 2022 ONS data: "high streets are being seriously challenged"

Tom Shearsmith
22 July 2022

The Office for National Statistics (ONS) revealed that retail sales in June were buoyed by bumper demand for food and drink by shoppers wanting to celebrate the Queen’s Platinum Jubilee.

The ONS said retail sales fell by 0.1% in June 2022 following a fall of 0.8% in May 2022. Sales were 2.2% above their pre-Coronavirus (COVID-19) February 2020 levels, but down over the past year.

Sales at non-food stores dropped by 0.7% for the month, driven by a 4.7% drop in sales volumes at clothing stores, while household goods were down 3.7%. The sales decline was the biggest since October last year, when labour shortages and supply constraints led to shortages at forecourts across the UK.

Key experts across the fashion and retail industry reacted to the June 2022 data:

Kelly Miely, Retail Partner at Deloitte

Kelly Miely, Retail Partner at Deloitte:

"June’s bank holiday weekend and the return of summer events did not give the retail sector the boost it was hoping for. 40-year high inflation continued to dent consumer spending power resulting in retail sales volumes falling by -0.1% for the second consecutive month.

"Street parties and the start of barbecue season benefited food sales volumes, which grew by 3.1% compared to May. Elsewhere, many consumers are cutting down on non-essentials, and despite wedding and holiday season now being in full swing, clothing sales volumes fell -4.7%. Spending on large ticket items such as furniture also fell -3.7%, bringing down non-food sales volumes by -0.7%.

"However, ongoing cost of living concerns are giving many consumers no choice but to allocate their spending on essentials only, such as groceries, with little or no wriggle room to spend on luxuries. For those consumers who are looking to reduce their supermarket spend, many are turning to shopping ‘little and often’ to curb single, large bills at the checkout."

CEO of the British Retail Consortium (BRC) Helen Dickinson OBE poses for a portrait at BRC offices in London Bridge, London, England on February 7, 2019.

Helen Dickinson, CEO of the British Retail Consortium:

“The cost of living crunch caused by record inflation continue to damage consumer confidence and stifle household spending. Discretionary spending and particularly bigger purchases were put off as consumers become increasingly concerned about the future. As a result, furniture sales and white goods were particularly hard hit, while food sales held up a little better.

“Retailers are squeezed between higher costs and weaker demand, resulting in the most challenging trading period since the start of the pandemic. Retailers are playing their part to help households by absorbing as many of these costs as possible, expanding their value ranges, and offering discounts for some vulnerable groups. With the government consultation on the design of the Transitional Relief scheme for the 2023 ending today, there is a clear opportunity to remove some of the burden on retailers that limits their ability to absorb more of the incoming costs.”

Silvia Rindone, EY UK & Ireland Retail Lead:

“Despite the long Jubilee bank holiday weekend at the start of June, today’s ONS retail sales data shows that consumers are feeling the pinch from the rising cost-of-living and are becoming more cautious about where and when they are spending. EY’s latest Future Consumer Index (FCI) found that 37% of low- and middle-income consumers are now only purchasing the essentials, compared to 26% in the last survey in February 2022, while 44% of low-income consumers are expecting their financial situation to worsen in the next 12 months.

“A fall in consumer confidence is now having a clear impact on retailers’ bottom lines. EY-Parthenon’s profit warning analysis shows that half of all profit warnings issued in H1 2022 came from consumer-facing sectors, compared to a third in H1 2021, with most citing rising costs as the reason for the warning.

“Companies which are managing to adapt to the challenges are those developing robust plans to manage cost inflation and who have strong processes in place around cash management and inventory visibility. They also need to ensure they address consumers’ affordability concerns by selecting the right value strategy to retain cost conscious shoppers such as offering value for money or ‘own label’ options.”

Dr Jackie Mulligan, Government High Streets Task Force expert and ShopAppy Founder:

“Government High Streets Task Force expert and ShopAppy founder, Dr Jackie Mulligan: “May was worse for the high street than we initially thought and there's every chance June will be the same, as such a small drop in sales doesn't reflect what we're seeing on the ground. It's no surprise to see clothing and household goods stores being hit hard, as people can make do without new clothes and furniture. If you're a retailer selling non-essentials, you're in a retail no man's land right now.

“Family businesses that line our high streets are being seriously challenged at present and this comes on top of two arduous years. Whilst cafes and small shops are a resilient bunch, we need action to support this sector, which forms both the economic and social fabric of our towns and cities. The new PM should consider the positive impact that small businesses play not only in creating jobs and supporting other suppliers, but also in providing social interaction and services for people.

“These largely family businesses are facing a double whammy of rising costs at home and in their business alongside financially squeezed customers. The best thing we can all do is shop with them because any purchase from a local shop is an investment in our community as well.”

Heather Bovill, ONS Deputy Director for Surveys and Economic Indicators:

“After taking account of rising prices, retail sales fell slightly in June and although they remain above their pre-pandemic level, the broader trend is one of decline.

“Clothing purchases dipped along with household goods, with retailers suggesting consumers cutting back on spending due to higher prices and concerns around affordability. Although still above their pre-pandemic level, the proportion of sales online fell to its lowest level since March 20220.”

Lynda Petherick, Retail Lead at Accenture:

“The continuing slide in consumer spending is another blow to a retail sector already grappling with increasing costs and decreasing customer spending.

“Many businesses will have been hoping that the Queen’s platinum jubilee and the long weekend would have given them cause for celebration, but it clearly wasn’t enough to offset battered consumer confidence.”

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