UK retail sales level out, but businesses face roadblocks in building back

Retail sales grew in July over the previous year, but the pace is unlikely to continue, according to data released by KPMG.

UK retail sales increased 4.7 per cent in July 2021 over July 2020, when they had increased 4.3 per cent from the preceding year. This is below the three-month average growth of 9.7 per cent and the 12-month average growth of 11.1 per cent.

The lifting of restrictions did not bring the anticipated in-store boost, which Helen Dickinson, CEO of the British Retail Consortium (BRC), attributed to wet weather dampening the desire to visit shopping destinations. 

Online sales, however, remained steady. The summer months drove an increase in shopping for formalwear and beauty products. Fashion outlets saw an increase in sales, while companies supplying home office equipment saw a dip after months of high sales.

Even with retail sales levelling out, however, there are numerous challenges facing retailers that are driving many out of business, as evidenced by the rising vacancy rate.

Currently, one in seven stores in the UK are now vacant, according to BRC research.

“Many shops and local communities have been battered by the pandemic, with many high streets in need of further investment. Unfortunately, the current broken business rates system continues to hold back retailers, hindering vital investment into retail innovation and the blended physical-digital retail offering,” Ms Dickinson said.

“The government must ensure the upcoming business rates review permanently reduces the cost burden to sustainable levels. Retailers want to play their part in building back a better future for local communities, and government must give them the tools to do so.”

Paul Martin, UK head of retail at KPMG, agreed that businesses might face a tough time ahead.

“Over the coming months the health of the sector is expected to grow at a much slower rate as retailers face increasing challenges on a number of fronts,” Mr Martin said.

“Staffing pressures, increases in commodity and component costs, rising inflation eating into households’ spending power and stalling consumer confidence could lead to a slowdown in retail sector growth as we head into autumn.”