Fashion sales strong in April, but has slowdown begun?

With UK interest rates having risen again on Thursday in response to surging inflation, the release of the latest BDO High Street Sales Tracker (HSST) could be evidence of the last gasp of a shopping frenzy ahead of consumers tightening their belts.

The HSST said that April was “a month of two halves as retail sales growth starts to slow”.

The headline figures showed the 14th month of consecutive retail sales growth, with total like-for-like sales up by 44.9% compared to April 2021.

But growth began to slow in second half of month and online sales also recorded a disappointing growth. Total non-store like-for-like sales rose 6.4%. That may have been the first positive result this year, but it was only a modest rise from a relatively low base of +28.2% in April 2021.

And BDO said that while fashion and lifestyle categories saw increases in their total like-for-like sales compared to 2021, the homewares sector saw almost no change, growing only 1.1%.

In fact, fashion saw the biggest growth, with total like-for-like sales increasing by 58.7% for the month, from a base of +84.2% for the same time last year.

But what evidence is there for BDO’s view that 2022 retail might have started to falter? Well, the first week of the month saw growth of 81.96% compared to the same week the previous year, followed by an increase of 86.7% in the second week.

Yet the final two weeks saw much lower rates of growth. In the third week like-for-like sales grew 18.41% compared to the same week in 2021 last year. Sales then grew by 14.4% in the final week of April 2022.

Those figures may be partially expected given that for the first two weeks last year, the UK was still under lockdown and the second two weeks reflect the reopening period in April 2021.

But the fact is that the reopening last year didn’t exactly see shoppers surging back to stores in ‘normal’ numbers as many people remained nervous about shopping physically. So with shoppers theoretically almost back to normal now, the relatively small double-digit rises this time aren’t that impressive. The jury’s still out on what this means for the next few months.

BDO’s Sophie Michael, Head of Retail and Wholesale, said: “We continue to see retail like-for-like sales outperform expectations, as April saw yet another month of positive headline numbers. However, a closer look at the data reveals a distinct shift in the middle of the month, with growth across all categories falling substantially in the final two weeks of April. There are a number of factors behind this. Stores reopening in the latter half of April 2021 resulted in a higher base with which to compare this month’s results. We also saw the traditional slowdown in discretionary spending over the Easter bank holiday weekend between the third and fourth weeks of April.”

But she added: “The cost-of-living crisis has also undoubtedly contributed to the slowing in growth, as consumers reduce their discretionary spending. Consumer confidence is lower than at any point since the financial crash in 2008 so, when combined with high inflation, it’s no surprise to see growth trending downwards. The barely noticeable growth in online sales is another indicator that discretionary spending is slowing down.

“This volatility in consumer demand comes at a time when retailers’ supply chains are more stretched and difficult to manage than ever. They will need to maintain the flexibility and resilience they demonstrated throughout the pandemic if they are to meet customer expectations and maximise their sales.”