Concern for British high street deepens with flat February sales
Online shopping drove retail sales in February, offsetting flat in-store sales on the high street.
In-store sales were lower in real terms in February, meaning that actual sales volumes shrank year on year, according to accountancy and business advisory firm BDO.
Total like-for-like sales grew by 2.3 per cent in February.
Retailers faced particularly challenging conditions, with in-store growth of just 1.2 per cent against a contraction of two per cent last year.
In-store fashion retailers registered no growth at all, after contracting 8.2 per cent last February.
“These results speak to the much reported and very concerning long-term decline in the UK high street,” Sophie Michael, Head of Retail and Wholesale at BDO, said.
With many out of the habit of high street shopping, shops have been struggling with a lack of in-store customers post-pandemic – even by early 2023, customer footfall was 10 per cent lower than in 2019, and in major cities, even less.
Brits have shifted towards the experience than the consuming economy instead of brick-and-mortar.
The cost-of-living crisis, too, lingers on Brits’ wallets.
“The majority [of Brits] are still struggling with a cost-of-living crisis that is far from over,” Neil Bellamy, Consumer Insights Director at NIQ GfK, said. “Prices are still rising above the Bank of England’s target; gas and electricity bills remain a challenge for many households.”
Consumer confidence rose in February but remained lower than this time last year.
Equity analyst at Shore Capital, Clive Black, said that prospects for the UK consumer economy were “more mellow” due to still-low consumer confidence and demand.
This has a direct effect on the high street: “Retailers are struggling to justify investment in their store estates as consumers continue to move more online and spend less on discretionary items.
“Retailers have already been clear that they are planning to reduce capital investment in the next 12 months, exacerbating the fundamental challenges facing bricks-and-mortar retail – a sector that remains vital to local economies throughout the country,” Michael added.
This is largely due to the £5bn in extra costs from higher national insurance contributions and a packaging tax set to hit the retail sector in April.
“[New costs] all come at once and put huge pressure on an industry that is already heavily challenged under the weight of its operating costs,” Michael said.