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Back to Blog July 1, 2018

UK retailers boosted by heatwave and England World Cup run

Sales in June were up by 2.3% in June, boosted in no small part by exceptional drinks sales in the final week of the month.

Two key factors have given UK retailers some much-needed and gratefully-received good news, at a time when the high street is facing many challenges.

Firstly, the heatwave that the country has been experiencing. Secondly, there has been a massive dose of World Cup fever – buoyed, of course, by England’s passage to the semi-finals (at least) of the competition.

Much needed cheer for retailers

The weather has helped to inject life into sales of beer, barbecues and big-screen TVs as the feelgood factor created by sun and success on the football field has been enjoyed by millions. The latest retail sales report figures compare favourably with the numbers from the corresponding month in 2017, when the average growth rate for consumer spending stood at 2%.

Brits seem to find the urge to breakout the barbecue at the first sight of sunshine irresistible. This, combined with the England football team’s advance to the latter stages of the World Cup, means that grocery and drinks sales figures were exceptionally strong in the last week of June – a trend that will inevitably have continued through the first half of July too.

It comes straight after what was a pretty good month in May – one of the best in recent years, in fact. Here, the mix of rising mercury and better weather was aided by royal wedding celebrations.

Are sales increases just papering over the cracks?

However, whilst it is tempting to get swept away on the crest of the feelgood wave, deep problems persist for many retailers. The decline of the high street continues to claim big name casualties. Marks & Spencer, Mothercare and House of Fraser are all in the process of closing shops. The recent BRC/KPMG survey shows that the shift from the high street to online shopping is continuing and shows no sign of slowing down.

Consumer spending levels remain weak across the UK since the result of the EU referendum. The heady mix of sunshine and sporting success may have provided welcome respite, but the euphoric mood will soon subside. With no deal on Brexit, shortages of goods and price hikes are a real possibility. Household incomes are hovering perilously (just) above inflation as the cost of imports post-Brexit vote remain high.

It’s also worth noting that despite the bumper sales in June for food and drink, sales of household appliances, furniture and footwear all declined. Across all categories, like-for like sales rose by 1.1% in June. However, in the same month a year ago, the figure stood at 1.2%.

Good news is good news, however long it lasts. The high street has taken such a battering recently that any increase in sales will be welcomed with very grateful arms. However, underlying issues and concerns remain. 2018 is still a very testing time for retailers.

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