Five retail leaders respond to ONS August sales data

UK retail sales showed unexpected strength in August, driven by warmer weather and end-of-season discounts, according to the latest figures from the Office for National Statistics. The data revealed a 2.4 percent increase in sales by value and a 2.3 percent rise by volume, according to the British Retail Consortium (BRC), surpassing economists' forecasts and providing a glimmer of hope for the sector as it approaches the crucial holiday shopping season.

Kris Hamer, Director of Insight at the BRC, noted the positive impact of summer discounts: "Computing performed well as extensive summer discounting encouraged consumers to upgrade their tech, and students organised themselves for the new academic year. Food, cosmetics, and fashion sales also had a good month as people hosted family and friends for picnics and barbecues and prepared for summer holidays and other social events."

However, Hamer cautioned that challenges remain, stating, "Clearly, the high cost of living still bears down on consumers, meaning demand may dip further when energy bills rise once again in October."

Deann Evans, Managing Director, EMEA at Shopify, highlighted early signs of holiday shopping momentum: “As we approach the key holiday season, there is hope for retailers that sales figures will continue to grow throughout the autumn months - with consumers looking at Black Friday Cyber Monday deals and thinking ahead to Christmas. However, in order to truly capitalise on this period it is crucial that brands consider how best they engage with their audiences. For example, our data reveals that more than four in five (82 percent) UK shoppers would become more loyal to brands if they were offered something (e.g. high-quality goods or service, promotions, surprises).”

Bukki Adedapo, International Expansion Leader at Fiverr, pointed to optimism among small businesses: "Recent research from Fiverr reveals that 70 percent of UK retailers anticipate higher sales this year compared to last." Adedapo also noted the continued importance of flexible staffing strategies, with 61 percent of retailers planning to hire seasonal workers.

Oliver Vernon-Harcourt, head of retail at Deloitte, offered a nuanced view of consumer behaviour: "While many consumers remain cautious and are opting out of purchasing big ticket or luxury items, some are still treating themselves by spending on little luxuries, resulting in a boost in sales of small discretionary items in personal care and in premium food categories."

Matt Dalton, Consumer Sector Leader at Forvis Mazars, said: “The UK economy has been steadily picking up the pace in the past few months, and August’s higher than expected retail sales are a testament to the fact. Economists have nearly doubled their end-of-year GDP projections for the UK in the last three months. Warm weather did play a role in the latest figures, but almost all categories posted solid growth. A robust retail sector may delay rate cuts from the Bank of England, to be sure, but there’s nothing fundamentally wrong with solid economic growth.”

Despite the positive August figures, retailers and analysts remain cautious about the sector's outlook. The upcoming autumn budget and potential interest rate adjustments are seen as critical factors that could influence consumer spending patterns in the coming months. As the industry approaches the 'golden quarter', all eyes will be on how these economic developments impact the crucial holiday shopping season.