DIYWEEK.net

Further sales declines mean 2018 is on course to be worst year on record for UK high street, with the British government urged to step up and help retailers.

This year may be remembered for the Royal wedding, a summer of sunshine and the World Cup, but it is also set to be a year to forget for the UK high street, says accountancy and business advisory firm BDO.

Figures released today reveal UK high street sales declined 1.7% year-on-year in June, marking the first time in at least 12 years that in-store growth has failed to exceed 1% in a single month for the first half of a calendar year. BDO’s High Street Sales Tracker (HSST) figures also mark the fifth successive month of negative in-store growth.

The final month in what BDO describes as “a crippling first half of the year”, saw negative like-for-like growth in a number of categories, with homewares down -2.4% and lifestyle goods down -0.3%. Fashion also declines -2.3% during the month. Non-store sales reported a growth of 10.4%, however, this is lowest year-on-year increase since December 2015, as retailers struggled to cope with further declines in consumer confidence.

Torrential rain and localised flooding across parts of the UK made a dent in footfall and sales, with overall year-on-year in-store sales plunging by -6.5% in the first week of June. 

Week two (+2.65%) and week three (+1.7%) saw sales grow, albeit from a poor base the year before, thanks to a combination of Father’s Day and a ‘World Cup bump’.

But the final week ended with a 5.4% year-on-year decline, as the scorching weather made it too hot to shop for many. The overall year-on-year growth figure for the month fell into the red at -1.7%. 

BDO LLP head of retail and wholesale Sophie Michael said: “The bleak and crippling start to the year shows no sign of abating, with deep discounting set to eat into margins that are already being stretched paper-thin by poor sales and rising costs, including the much-discussed issue of unfair business rates on high street retailers.

“These numbers confirm what many retailers have already suspected – this has been the worst first half of a calendar year for more than a decade.”

Two years on from the EU referendum and the consumer purse is still under significant strain amid sluggish wage growth and waning consumer confidence. 

She added: “Spending on food and drink or leisure and entertainment is still being prioritised over fashion or big ticket items for the home. People have simply reined in their spending, online and in store, and extreme weather of snow in March and heatwaves in June has only exacerbated this trend.   

“It will take a monumental change in fortunes on the high street to turn 2018 into anything other than an annus horribilis.”

The findings from BDO’s High Street Sales Tracker come just days after the independent review of the UK high street by former Wickes and Iceland CEO, Bill Grimsey. 

The Grimsey Review 2 estimates that 28,000 retail jobs have disappeared in 2018 and a further 40,000 are predicted to go by the end of the year.

Sophie Michael said of this report: “The findings are worrying. This is a huge red flag for businesses and government alike. The retail sector plays a hugely significant part in our economy; in employment, in taxes and in its societal impact on local communities. It is more important than ever that the Government not only steps up but stands up for the future of the great British high street.”