Retail sales volumes have fallen by 0.9% in September 2023, following a rise of 0.4% in August 2023, the latest figures from the Office for National Statistics show.
Looking at the quarterly picture, sales volumes fell by 0.8% in the three months to September 2023 when compared with the previous three months.
Non-food stores sales volumes fell by 1.9% in September 2023; retailers reported that the fall over the month was because of continuing cost of living pressures, alongside the unseasonably warm weather reducing sales of autumn-wear clothing.
Non-store retailing (predominantly online retailers) sales volumes fell by 2.2% in September 2023, following a fall of 0.9% in August.
Food stores sales volumes rose by 0.2% in September 2023, following a rise of 1.4% in August 2023.
Automotive fuel sales volumes rose by 0.8% in September 2023, rebounding from a fall of 1.0% in August 2023.
Kelly Askew, Accenture’s retail strategy & consulting lead in the UK and Ireland, said: “An unseasonably warm September wasn’t enough to give retailers a sales boost after a grey summer. Sales of essentials including food and fuel saw marginal gains but spending cuts on non-food items like clothing, typically a boost during the back to school season, meant a flatter outlook overall.
“Retailers will be hoping to turn this around as we head towards Christmas but, with consumer confidence figures this morning showing the biggest month to month drop in three years, this is unlikely to be easily won. Wednesday’s ONS inflation figures remaining steady amid rising fuel prices mean consumers may still be looking at cutting back this festive season.
“The run up to Christmas is a critical time for retailers. With pressure on budgets, businesses should focus on making the most of big spending events like Black Friday to help consumers feel like they’re getting better value from their Christmas shopping.”
Oliver Vernon-Harcourt, head of retail at Deloitte, said: “The joint warmest September on record and a return to school failed to fuel overall growth in retail sales in an unexpected subdued performance. The late summer heatwave delayed the purchase of autumn and winter goods, with continued uncertainty around high mortgage rates, falling house prices and rising rents.
“The cost of many essential items remains high, following a period of prolonged pressure from food inflation. While food sales saw marginal growth in September, retailers will be focused on providing the best value for their customers in the run up to the festive period.
“As we enter the ‘Golden Quarter’, retailers will be hoping for a steady increase in consumer confidence. Deloitte’s upcoming Consumer Tracker report will show that more consumers are planning to do their Christmas gift shopping on the high street than last year. With this in mind, we anticipate a highly competitive festive season for retailers where product, price and availability, combined with great in-store customer service, will be key to secure their share of consumer spend.”
“There are also signs that cautious customers are cutting back spending on discretionary items with non-food categories particularly hard hit and big-ticket items like furniture and jewellery all down. September’s Indian summer has also impacted sales of new-season clothing.
“Online sales were also not helped by the warm weather and the continued cautious nature of consumers towards non-food spending.
“Food was one of the only categories that bucked the decline with volumes up 0.2%. While the Rugby World Cup and Indian summer likely gave people cause to come together and celebrate with barbeques and picnics, the divergence between volume and value continues to increase as people cut back on consumption. Slowing rates of grocery price inflation are yet to translate into volume but will hopefully be a welcome relief to shoppers as some prices start to stabilise.
“As consumers thoughts now turn to holiday shopping, retailers will need to be able to understand, anticipate and react to the changing behaviour of customers across all channels – online and in-store. Value, quality, and variety will be important factors in remaining competitive. Incentivising consumers to shop with lower prices, better promotions and lower delivery fees could help. While providing a range of attractive choices for customers will differentiate retailers and drive engagement away from heavy discounting. Although, it’s likely consumers will remain discerning when it comes to where they spend their money and be choiceful in their holiday spend.”
Silvia Rindone, EY UK&I retail lead comments: “Following a month of growth in August, retail sales volumes fell by 0.9% in September as consumers remained cautious. The unseasonably warm weather in September impacted non-food store sales which fell by 1.9% as consumers delayed refreshing their winter wardrobe. The increasingly unpredictable nature of the weather is something retailers will need to manage. There are currently high levels of unseasonal stock across the whole sector, which may lead to increased discounting in the lead up to Black Friday as retailers look to stimulate sluggish demand among shoppers.
“Food sales volumes saw an unseasonal spike of 0.2%, as the warm spell prompted consumers to make the most of the good weather.
“Online sales continued their downward trajectory in September as non-store retailing sales volumes fell by 2.2%. Retailers will be hoping to see an uplift in online spending in the run up to Christmas with Black Friday and Cyber Monday on the horizon.
“A combination of supressed and unpredictable demand and higher interest prices are starting to affect the retailers that didn’t use the pandemic period to realign their businesses. Those that continued not to invest in stores, propositions or customers are finding that shoppers are choosing to go elsewhere.
“Looking further ahead, the EY ITEM Club Autumn Forecast predicts a mixed picture for consumer spending, which is expected to benefit from several supports over the coming months. Falling energy bills and easing food prices and inflation means overall inflation should decline to a predicted average of 7.4% this year, before falling to 2.9% in 2024.
“As we enter the final ‘golden’ quarter of the year, pricing and inventory will be key priorities for retailers and brands. Last year, many consumers delayed spending as late as possible to help manage their finances leading to heavy discounting much earlier than normal. Retailers will need to consider what impact this may have on cash flow at a critical time of the year.”
Dan Edelman, vice president & UK general manager, Merchant Services at American Express: “Against the challenging backdrop revealed by today’s ONS figures, winning share of wallet continues to be an intense battle for retailers, as many consumers carefully prioritise where they are spending.
“Our latest research found that cost of living pressures have prompted six in 10 (59%) shoppers to turn to loyalty schemes to help them save money. However, the study found that for schemes to drive engagement, they must be accessible, personalised and offer genuine savings for consumers. Simplicity (38%) and getting a good return on their spend (36%) ranked top of the list for shoppers using loyalty schemes, according to the survey.”
