October sales flat: Golden Quarter begins on shaky ground

The UK retail sector has experienced a subdued start to the 'Golden Quarter', with total like-for-like (LFL) sales across discretionary categories – including fashion, homewares, and lifestyle – broadly flat at -0.02% in October. This marks an end to four consecutive months of positive sales growth, as persistent inflation and weak consumer confidence weigh on spending, according to the BDO High Street Sales Tracker.

While overall sales stagnated, there was a clear divergence between channels. In-store sales continued to show some resilience, rising by +1.1% and outperforming online for a second consecutive month. This suggests that despite broader economic pressures, consumers are still making considered purchases in physical stores, potentially for key fashion items as they transition their wardrobes for autumn and winter.

However, the monthly data reveals an "uneven" picture, with sales faltering in the first and final weeks of October. The last week, coinciding with school half-term holidays, saw declines across both in-store and online channels. This indicates that families, "feeling the pinch," prioritized spending on experiences and travel over retail purchases, a trend that directly impacts discretionary categories like fashion.

Sophie Michael, Head of Retail and Wholesale at BDO, commented on the "frightening reading" for retailers, emphasizing the fragility of consumer confidence. "Shoppers are still haunted by high inflation, particularly on food, while uncertainty about their household finances is keeping a firm grip on discretionary spending," Michael stated. This cautious consumer behavior has led to a prioritization of essentials and experiences over non-essential goods, impacting the fashion sector.

The impending Autumn Budget, just days before Black Friday, adds another layer of pressure. Retailers, including those in fashion, face critical investment and promotional decisions without clear fiscal guidance. Michael anticipates "earlier and more prolonged discounting to stimulate demand," but warns of the risks to margins. Fashion retailers will need to strategically balance promotions to engage customers while protecting profitability to avoid a challenging start to the new year.