Poor July sales rock high street recovery

Poor in-store sales through the month of July have “dampened hopes of a recovery” across UK high streets, according to the latest High Street Sales Tracker from BDO.

In-store like-for-like sales decreased by 39.4% last month, down from a marginal base of 0.1% that was reported the year before. 

According to BDO, “optimistic hopes of a quick bounce-back” for the high street have now been tempered as July marked the sixth consecutive month of negative total like-for-like sales, which “underscores significant long-term challenges facing retailers”.

The firm found that in-store like-for-like sales for lifestyle fell by 35.4% in the period, down from the “already poor” 3% decline reported the same period the year prior. 

Meanwhile, fashion in-store like-for-like sales plummeted by 50% in July, down from the 1.2% rise last year, marking the fifth month of negative like-for-like sales for in-store fashion.

Homeware, however, saw an “impressive rebound” in the period, with in-store like-for-like sales up by 5.4% this month, marking only a 0.4% decline against last year.

In July, three out of four weeks saw positive in-store sales for homeware, marking the first positive monthly like-for-like sales for the category since January.

Despite overall poor sales across high street destinations, non-store sales remained high in the period, with a year-on-year increase of 81.2%, up from a 20.5% increase last year. 

According to BDO, the reopening of bricks-and-mortar stores has, however, led to a “qualified diminishing” against April, May, and June, which all saw non-store like-for-like sales of above 100%.

Sophie Michael, head of retail and wholesale at BDO, said: “July has marked yet another difficult month for struggling retailers. Despite initial optimism that the reopening of stores would see the high street bounce back, the July results tell a more difficult story. 

“The reality is that footfall remains dismal, and some retailers opted for a more gradual approach to opening their estates last month while social distancing measures also continued to restrict capacity in-store.”

She added: “Low discretionary spend remains a major factor that will continue to place a limit on the high street’s rehabilitation. In addition, the end of the Government’s furlough scheme is likely to have a heavy impact on the retail sector, which accounts for almost 10% of British jobs and has relied heavily on the scheme. 

“It is clear that the retail sector is essential to the broader economic recovery. With more high street chains at risk and further job losses predicted, recovery looks a long way off. The high street is crying out for a confidence boost but with the full impact of coronavirus on the UK economy yet to be realised, uncertainty will prevail for the foreseeable future.”