Retail sales growth in the UK is slowing down as shoppers hold off on spending until Black Friday deals
UK retail sales growth dropped in October, according to industry reports. Shoppers are delaying their purchases in hopes of Black Friday deals and because the school half-term break came later this year.
Data from the British Retail Consortium (BRC) shows that total sales increased by only 0.6% compared to last year, which is much lower than the growth in September and less than half of the average growth rate over the past three months.
Fashion sales were hit the hardest because the warm weather made people less interested in buying winter clothing. Industry leaders noted that many shoppers are holding off on spending as they get ready to look for bargains during the upcoming Black Friday sales.
The weakness in sales was partly because many families in England had their half-term break later in October compared to 2023. Sales usually go up during school holidays, but the British Retail Consortium (BRC) mentioned that this increase would show up in their November data.
Helen Dickinson, the BRC’s chief executive, noted that worries about the budget and rising energy costs made consumers anxious. “After a strong start to autumn, October’s sales growth was disappointing,” she said.
In the three months leading up to October, food sales went up by 2.9% compared to last year, but that’s down from a 7.9% increase in the same period last year. Non-food sales dropped by 0.1%, mainly due to lower spending on toys, baby items, clothing, and furniture.
Barclays reported that spending is slowing down, even though people feel more confident about their finances and the UK economy.
The bank handles nearly 40% of all credit and debit card transactions in the UK. They found that many shoppers are preparing for Black Friday. A survey of 2,000 consumers by Opinium for Barclays showed that 37% plan to shop during the sales, and almost one-third have already added items to their online shopping baskets to check for discounts.
Barclays noted that consumer card spending increased by 0.7% compared to last year, which is less than the 1.2% increase in September. This growth was mainly due to spending on non-essential items and entertainment, such as Coldplay concert tickets and digital streaming services.
However, spending on essential items, like groceries, dropped by 2.2% compared to last year, marking the largest decrease since April 2020, when the Covid pandemic began.
In September, there was a big drop in consumer confidence just before Labour’s first budget since 2010. Keir Starmer and Rachel Reeves warned that households and businesses should expect “painful” tax increases to fix government finances and support public services.
Last week, the chancellor announced £40 billion in tax increases aimed at businesses and wealthy individuals, hoping that voters would appreciate the government’s efforts to improve the country’s public services.
Linda Ellett, the UK head of consumer, retail, and leisure at KPMG, which tracks retail sales, said, “Now that the budget is clear and many households won’t face higher taxes from their wages, retailers are hoping to see an increase in consumer confidence and spending.
“However, any good news for retailers will be tempered by the higher employment costs they will face. The promotional events around Black Friday will be the first real test of how consumers feel after the budget.”
Published: 5th November 2024
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