Shop sales per occupied square foot climbs to a record high
UK consumers defied widespread drought and have continued to splash the cash in recent months, with the latest data also showing that physical stores have never been more productive in driving retail sales.
Sales volumes rose by 1.1% in the three months to July, compared with the three months to April, as the warmer weather, the summer of sport and retail promotions persuaded shoppers to open their wallets despite ongoing cost-of-living challenges.
The latest data from GfK suggests such momentum has continued, with consumer confidence hitting a two-year high in August.
The sector breakdown shows a strong recent performance by online retailers, but also an ongoing recovery in household goods outlets and department stores. Despite a blip in July, the three-month growth story was a positive one in both segments, with sales rising 2.5% and 0.8% respectively. Department stores were boosted by sales of items such as fans and paddling pools as consumers battled multiple heatwaves.
The data also showed that a drop in petrol sales could be supporting retail spending elsewhere, with automotive fuel sales dropping by 3.6% in the three months to July despite a rise over the latest month. High prices at the pump led consumers to make fewer journeys, supporting discretionary spending elsewhere.
Perhaps most interesting for retail property stakeholders is data showing the growing value of physical real estate, with the amount of retail sales tied to shopfloor space rising at a faster pace than the overall amount of occupied retail space.
After excluding fuel sales and online spending, retail sales reached £105.3 billion in the second quarter of 2026, a 9% increase from the £97 billion spent in shops in the final quarter of 2019 just before the pandemic struck. Over that same period, occupied retail space in the UK was precisely flat at 1.7 billion square feet.
That disparity has driven up retail space efficiency. Retail sales per occupied square foot climbed to a record £61.92 in the second quarter of 2026, up 23% from the figure of £50.39 recorded in the final quarter of 2019.
This is significantly higher than the 4.9% increase in average nominal retail rents over the same period. It is also nearly double the 12% increase in sales per occupied square foot recorded in the six-and-a-half years preceding the pandemic.
This has implications for retail property owners and investors. While not every retailer or location is positioned equally, and synergies between physical and online spending have increased to blur the lines a little, the aggregate data suggests that retailers in general may be better able and willing to weather an increase in their shop rent than before the pandemic.
Retailers are generating more sales from an unchanged amount of shop space, and that continued improvement in space efficiency provides a solid foundation for stronger fundamentals and a potential reacceleration in retail rent growth into 2027, likely increases in inflation, business costs and constrained household balance sheets notwithstanding.
