According to recent reports by the British Retail Consortium (BRC) and Barclaycard, retail sales growth in the UK weakened in September, raising concerns about consumer spending trends.

The BRC-KPMG retail sales monitor showed that total sales only grew by 0.6% year-on-year, a significant drop from the average growth of 3.1% seen in the previous three months. Notably, like-for-like sales actually decreased by 0.6%. However, non-food retailers experienced a 3.8% increase in sales compared to the previous year. It is important to note that this growth was hindered later in the month due to fuel shortages that impacted consumer behavior.

On the other hand, the monthly Barclaycard report presented a slightly more positive outlook, indicating a 13.3% increase in spending on payment cards compared to September two years ago. The report highlighted that consumers focused on essential items such as food and fuel, which saw a significant uplift of 13.3%. However, spending on non-essential items experienced a smaller increase compared to August. Notably, there was a boost in spending on pubs, bars, clubs, and other entertainment venues as office workers gathered for post-work gatherings.

Despite the relatively strong spending figures reported by Barclaycard, consumer confidence remains fragile due to ongoing supply chain issues and rising inflation. The report mentioned that some consumers may be starting to reduce their discretionary purchases. In fact, the number of Britons feeling confident in their ability to buy non-essential items fell by four percentage points in September, reaching the lowest level since February 2021.

As a result of these concerns, some shoppers are actively seeking value in their purchases. Discount stores saw a significant increase of 29.3% compared to 2019. Additionally, 56% of Britons believe that if energy prices continue to rise sharply, it will be harder for them to spend money on “nice-to-have” items.

Despite the challenges, the fashion and beauty sector appears to have benefited from lockdown savings, pent-up demand, and the need for new purchases for work and social events. Sales through department stores and pharmacy, health & beauty retailers experienced notable increases of 3.6% and 17.5%, respectively, marking the sharpest growth for both categories since May 2021. Clothing sales also witnessed positive growth of 10.1%, although transaction numbers saw a slight decline of 1.9%.

Overall, the reports paint a mixed picture for UK retail sales growth in September. While there are positive signs with increased spending in certain sectors, the weakening consumer confidence and supply chain challenges raise concerns for retailers. Navigating these uncertainties will be crucial for businesses to ensure their resilience in the coming months.

Useful links:
BRC Retail Sales Monitor
Barclaycard Data Insights