High street sales make modest rebound helped by warm weather in May

High street retailers enjoyed a modest rebound in sales last month as shoppers stocked up on summer clothes, barbecue food and outdoor toys, reports The Guardian.

The warm weather helped like-for-like sales rise 0.5 per cent on the year in May, the British Retail Consortium (BRC) said. It brought some relief to retailers after falling sales in the previous two months, but the trade group said conditions remained tough.

“Clothing made a big comeback this month after suffering declines in April. This appears to be due to consumers waiting for just the right moment before embarking on their pre-summer spending,” said BRC’s chief executive, Helen Dickinson.

“However, with signs that the UK’s economy is slowing it’s unlikely that this is the beginning of a complete reversal of fortunes. The uncertain outlook means that customers will remain cautious with their spending, therefore we expect sales figures to remain volatile for the time being.”

There were also increases in the sales of household appliances, beauty products and toys in May, but people appeared more reluctant to spend on bigger items such as furniture, perhaps linked to a slowdown in the housing market, BRC said.

The report showed food sales enjoyed their fastest growth since October, rising 0.3 per cent on the year in total terms, which does not adjust for the effect of new store openings. The BRC said sales were down in like-for-like terms, but it would not say by how much.

The market researchers IGD, which compiled the BRC’s food figures, said it was encouraging to see retailers were able to eke out an increase in total sales despite lower prices in the fiercely competitive sector.

The Euro 2016 tournament starting this week was further cause for optimism for grocers, said IGD’s chief executive, Joanne Denney-Finch. “Big international football tournaments are usually good for food and drink sales, and this time there are three UK teams to support,” she said.

The news of a pickup in sales will allay fears that households are curbing spending ahead of the EU referendum this month. With opinion polls tight, there have been signs that businesses are deferring spending decisions until after the vote, but consumers appear less affected.

Separate figures from Barclaycard also suggest consumer spending rebounded in May, rising 3.6 per cent on a year earlier after two months of weak growth. Warmer weather brought a seasonal boost to spending on clothing, DIY, gardening and entertainment, according to Barclaycard, which processes nearly half of all UK card transactions.

It also surveyed more than 1,700 people to gauge consumer confidence and found optimism about household finances picked up in May while confidence in the UK economy fell.

“Consumers are increasingly confident in their ability to manage their own finances, but their view of the health of UK plc has continued to fall as a consequence of continuing nervousness over the wider economy,” said Barclaycard’s managing director of corporate affairs, Paul Lockstone.

“While it is encouraging to see May’s numbers move sharply positive, 2016 spending is trending significantly below last year so it will be interesting to see whether these numbers are a seasonal blip or the beginning of a real and sustainable upturn in consumer spending.”