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Abu Dhabi, UAEThursday 13 December 2018

British shops endure worst August for three years, says survey

Above-target inflation and record-breaking heatwave made spending on entertainment more appealing than shopping

London-based Dixons Carphone, on Thursday, reported flat underlying sales in its latest quarter. Reuters
London-based Dixons Carphone, on Thursday, reported flat underlying sales in its latest quarter. Reuters

British shops suffered their worst August in three years, a survey showed on Friday, as inflationary pressures and a record heatwave drove consumers away and a shift to buying online continued.

Accountancy and business advisory firm BDO said its monthly High Street Sales Tracker (HSST) showed sales dropped 2.7 percent in August from a year earlier.

That marked the seventh straight month that in-store sales have fallen.

Above-target inflation and sluggish wage growth are denting spending on goods other than food, while a record-breaking summer heatwave made spending on entertainment more appealing than shopping.

In the fashion sector, in-store sales fell every week in August, and by more than 3 per cent during three of those weeks, for their worst performance since 2015.

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Homeware sales did even worse, slumping 6.1 per cent - the sub-sector's worst performance August since 2012.

In contrast, online sales of all goods jumped 13.7 percent.

"In a climate of rising interest rates, prices rising and subdued real wage growth, there is limited discretionary spend left and that is taking its toll on fashion and homeware sales, especially bigger-ticket items," said Sophie Michael, BDO's head of retail and wholesale.

A survey published by the British Retail Consortium also reported sluggish sales growth for August.

Recent trading updates from retailers have also been subdued.

On Thursday electricals and mobile phones retailer Dixons Carphone reported flat underlying sales in its latest quarter, while department store John Lewis said on Tuesday that its total sales rose just 1.3 percent in the five weeks to September 1.