Wet July weather weighs on retail sales and dampens demand for summer clothing

Unusually wet weather impacted British retail sales last month, pushing them down by more than had been expected, the Office for National Statistics has reported today.

ONS figures suggested that retail sales volumes fell 1.2% during the month, and that people chose to shop online more rather than heading to the shops in the rain.

Economists had expected a fall, but only by 0.5%, according to an average of different estimates provided by Pantheon Macroeconomics. The drop followed a better than expected 0.7% rise in retail sales during June.

However July's wet weather and online promotions meant the proportion of sales made via the internet during the month grew from 26% in June to 27.4% in July, the highest level since February 2022.

There was a 2.6% fall in retail sales volumes at food shops. Part of this was because of a drop in food sales, but much of it was due to a fall in clothing sales at supermarkets due to the bad weather.

ONS Deputy Director for Surveys and Economic Indicators Heather Bovill said: “Retail sales fell sharply in July as poor weather impacted most sectors.

“It was a particularly bad month for supermarkets as the summer washout combined with the increased cost of living meant sluggish sales for both clothing and food.

“Department store and household goods sales also dropped significantly.

“The wet weather did mean a good month for online retailing, as discounting plus consumers shopping from the comfort of their homes boosted sales.”

Analyst Reaction

Deloitte, Retail Partner, Kelly Miely:

“In major contrast to June, retail sales were dampened in July by very wet weather as consumers spent less on summer clothing and seasonal goods.

“Despite inflation easing, prices continue to be high compared to a year ago, particularly the cost of food products, putting a squeeze on consumer spending. Coupled with rising interest rates, both consumers and retailers continue to be exposed to tricky economic conditions that are impacting sales growth.

“Retailers will be hoping for a brighter forecast for the rest of the year. There will continue to be winners and losers across the industry, with those coming out on top being the retailers that focus on creating the best combination of value, quality and experience for their customers.”

Wealth Club, Manager of the Quality Shares Portfolio, Charlie Huggins: 

"Retail sales volumes in July came in worse than expected, with unusually wet weather putting a dampener on sales of summer clothing and reducing store footfall.

"Online sales were more robust, rising by 2.8%, helped by promotions and the poor weather.

"The big question is – is weather the only culprit or is this the sign that cost of living pressures are really starting to bite?

"It may be a bit of both, but the weather is likely to be the biggest factor. This was the 6th wettest July on record and the fact is the weather Gods always play a big part in consumer's spending habits.

"Results from retailers themselves suggest consumer spending still remains quite robust. Earlier this week M&S upgraded profit expectations, while Next, the bellwether of the UK high street, has also seen much stronger than expected trading in recent months.

"So we probably shouldn't read too much into these weaker than expected figures. That said, with mortgage rates having increased significantly in recent months, it is likely that pressure on consumers will build in the second half."

EY UK&I Retail Lead, Silvia Rindone:

“The UK’s unusually wet summer continued to affect retail sales in July as consumers avoided the high streets and retail parks, and had less cause for summer spending.

“Sales volumes fell by 1.2% month-on-month in July – a fall of 3.2% on 2022’s July figures, while spending was down 1% from June too. Clothing was among the most affected, as the wet weather meant there was little encouragement for purchasing new summer clothes. Cost of living pressures will have had an impact on food sales too.

“Despite a slow July, retailers should see sales improve in August as families start shopping for the start of the new school year in September. ‘Back to school’ is often the highest spending season in retail after Christmas.

“Amid continued cost-of-living pressures, many shoppers will still be looking for bargains or making the most of private label goods. EY’s latest Future Consumer Index found that affordability continues to be at the top of consumers’ minds, with 43% stating it is a key decision when making a purchase and 80% willing to buy private label goods.

“Many homeowners are also worried about rising mortgage rates, which will inevitably lead to further pressures on discretionary spending as consumers look to cover the increase in household bills.

“However, there is positive news, with UK grocery inflation easing for the fifth consecutive month in July, down 2.2 percentage points from the previous month. Shoppers will see the cost of food essentials fall marginally when compared with prices earlier this year, a welcome change after months of rising costs, which could positively affect volumes as well as overall sales.

“This year, retailers have had to remain vigilant of the economic factors affecting discretionary spending – factors that have changed on a monthly basis. This planning and agility will need to continue as consumers once again re-evaluate their spending habits. While there may be a temptation to keep prices elevated in order to recoup any losses from earlier in the year, this could hurt sales volumes as consumers cut back on non-essentials.”