Published
Mar 4, 2022
Reading time
2 minutes
Download
Download the article
Print
Text size

UK saw strong retail sales in February, but pain ahead for mid-level sellers

Published
Mar 4, 2022

UK retail saw surprisingly strong sales growth last month as “unseasonal discounting” spurred consumers to spend more than would normally be expected in February. But analysts are predicting tough times ahead for “squeezed” mid-level retailers while premium and value specialists do well.


Shutterstock



In fact, it was a record 12th month of consecutive sales growth with total like-for-like sales up by a little short of 50% compared to a year earlier. 

That said, non-store sales saw a substantial fall for the second consecutive month of decline and the cost of living crisis is expected to affect both online and physical retailers in the future as consumers search for greater value.

That's all according to the latest BDO High Street Sales Tracker (HSST), which said total like-for-like sales, combined in-store and online, increased by 49.6% in February from a base of -3.1% for the equivalent month in 2021 — although the 2021 figure isn't a surprise given that the UK was in full lockdown back then.

Total non-store like-for-like sales fell by 19.4%, the biggest fall ever recorded by BDO. But the decline has to be looked at in the context of radically elevated non-store like-for-like sales (+167.3%) a year ago.

BDO also said total like-for-like sales saw substantial increases across all categories compared to February 2021. And following growth of 44.04% in the first week of the month, the following weeks saw like-for-like sales growth of 62.34% and 61.43%. In the final week of February, growth was 59.2%.

The best news for the industry was that fashion saw the biggest growth of all sectors with total like-for-like sales increasing by 68.1% for the month, from a base of -3.6% for the same time last year. 

Sophie Michael, Head of Retail and Wholesale at BDO LLP, said: “As we expected, February has seen strong like-for-like sales for retailers. The cost-of-living crisis, although building momentum, is yet to fully impact consumers. Increases in energy prices and National Insurance won’t take effect until April. This may be the point at which the strong discretionary spending we’ve seen over recent months starts to subside. Retailers will also have to navigate the challenge of higher costs, and deciding whether they can absorb these or pass them on to consumers, at a time when the consumer purse is being squeezed.

“As the cost of living rises, some consumers will naturally want to adjust their shopping behaviours and seek out better value products to stretch their finances. At the same time, we also expect demand for higher-priced premium products to remain strong. Once again, we may see those mid-level retailers who can’t afford to lower their prices really getting squeezed. 

“This is all set against a backdrop of plummeting consumer confidence, which may presage a gloomy outlook for retailers in the next six months. To stay competitive, retailers will need to focus on the right products and product differentiation. Managing inventory levels and pricing will also be essential, as retailers respond to higher operational costs and fluctuating consumer demand.”

Copyright © 2024 FashionNetwork.com All rights reserved.