The latest data from the British Retail Consortium (BRC) and KPMG shows that sales fell 2.1 per cent on a like-for-like basis in September, compared with the same month a year earlier.
A number of fashion retailers had already flagged difficulties as the extended warm spell meant shoppers had not been tempted by their autumn and winter ranges, but today’s figures show food sales were also lower and even online retailers suffered, seeing their growth rate almost halved.
BRC director general Helen Dickinson said September’s sales figures were the lowest since December 2008, excluding Easter distortions.
“This can be attributed to a number of factors, including the continuing decline in food sales,” she said. “Furthermore, there was exceptionally low demand for items such as boots and coats, resulting in the lowest fashion sales performance since April 2012.”
But she said demand for big ticket items continues to be strong, with furniture outperforming all other categories. And she added: “Despite the testing environment last month there are encouraging signs for the industry as the build-up to Christmas begins. Toys and beauty products sold well and sales are only expected to accelerate for these items around Christmas.”
But Howard Archer, chief UK economist at IHS Global Insight, said that despite some mitigating circumstances, September was fundamentally disappointing and will fuel suspicion that the UK economy lost some momentum in the third quarter.
He said: “It certainly does look like consumers have reined in their spending to some degree after splashing at a strong rate overall through the first half of the year. This is not that surprising, given the overall pressure coming on consumers’ purchasing power from prolonged very weak earnings growth.
“In addition, some consumers may be becoming increasingly careful in their spending due to concern that interest rates start to rise before long. The fact that debt levels are still relatively high reinforces this possibility.”
There are still decent supports for consumer spending and retail sales in the months ahead, notably high and rising employment and low inflation, Archer said. And consumer confidence is still at an elevated level. He added: “It is likely that data out over the next couple of days will show consumer price inflation and earnings growth moving closer in line, thereby easing the squeeze on purchasing power.”
The BRC’s figures show that, over the last three months, food sales have slipped 1.7 per cent. The non-food category reported growth of 3 per cent.
Online sales of non-food products in the UK grew 8.2 per cent in September against 13.4 per cent a year earlier.
David McCorquodale, head of retail at KPMG, said: “The prolonged ‘Indian summer’ wilted retail sales in September … Selling woolly jumpers in warm weather is a tough ask.”