High street sales fall further behind online trade with disappointing July – London Business News | Londonlovesbusiness.com

Total like-for-like retail sales (in-store and online) grew by just +2.8% in July, compared to a base of +3.0% in July 2024, according to the latest High Street Sales Tracker from accountancy and business advisory firm BDO.

Sales in bricks-and-mortar stores grew by just 0.8% compared to July 2024, delivering a result significantly below inflation and therefore a reduction to volumes once again.

Online trading propped up the retail sector’s growth this month, with sales increasing by +8.3% compared to the same month last year.

This is the seventh consecutive month of lower in-store sales, reflecting the sector’s ongoing struggle to get shoppers out onto the high street and spending money.

The fashion sector’s performance reflects the growing gulf between online and bricks-and-mortar retail. Fashion saw ecommerce sales growing by +10.1% compared to in-store sales of just +1.3%.

Sophie Michael, Head of Retail and Wholesale at BDO, said, “Consumers are under huge pressure. Food inflation remains stubbornly high and this is leaving shoppers with very little disposable income for non-essential spend.

“We naturally expect retail sales to be challenging during the school holidays as families fly overseas and prioritise disposable income in spending on experiences and social activities. But this month’s figures point both to a longer-term trend – the strengthening of online retail’s supremacy over the high street – and the economic challenges the UK is facing.”

BDO says the growth in online sales demonstrates that easy access to the best deals or a product range that hits the moment just right can encourage consumers to spend. Bricks-and-mortar stores struggle to match this agility and continue to find it much harder to respond to trends or quickly pivot to changes in consumer preferences.

Sophie Michael adds: “There have also been recent reports of the return of the ‘lipstick effect’ on consumers as they look to small, affordable treats like lipstick to lift their mood during an economic squeeze. By offering affordable, luxury items, retailers may be able to attract the consumer in for larger spends. August may be a difficult month to ramp up sales, but retailers need to do everything they can to convert summer stock to sales revenue.”