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Falling sales in supermarkets has dragged down growth on the high street in September as shoppers cut back on luxury foods, the latest figures released this morning revealed.
The Office for National Statistics (ONS) reported a 0.3% increase in retail sales volumes last month, down from 1% growth in August.
It is the third month in a row of growth for British retail sales.
The ONS said computers and telecommunications retailers grew strongly but were offset by declines at the supermarkets.
Sales volumes at food retailers fell 2.4% during the month to September, which represented the largest month-on-month fall for supermarkets this year.
The ONS said that comments from retailers pointed to unseasonably poor weather and consumers continuing to cut back on luxury food items.
Clothing sales saw a resurgence in September with non-food store sales volumes rising by 2.5% in September, as consumers sought to update their seasonal wardrobe, especially as the weather turned colder.
Silvia Rindone, EY UK&I retail lead, said: “The next few months will be critical as retailers brace themselves for the ‘golden quarter,’ with key shopping events such as Halloween and Black Friday drawing near. Retailers will be using discounting strategies to stimulate consumer spending and manage stock levels more effectively.
“Retail sales could still be volatile in the run up to Christmas, with retailers who can target particular customers seeing more success.
Morning update
The uncertain outlook for the UK economy has pushed a record number of businesses into significant financial distress, according to the latest red flag alert by Begbies Traynor.
There were 632,756 such businesses in the UK in the three months to the end of September, up 5.1% from the previous quarter and a third higher than the same period in 2023.
The steady increase in companies experiencing ‘significant’ financial distress was driven by noticeable increases in distress in the Utilities (+19.3%), Food & Drug Retailers (+10.4%), Financial Services (+9.94%) and Bars & Restaurants (+8.7%) sectors.
Begbies partner Julie Palmer said: “So far, there is no hiding from the fact that 2024 has been hard to navigate for companies and the final quarter looks no different as a high degree of uncertainty weighs on the UK economy.
“For some, the prospect of a change of government was viewed as a potential catalyst for a much-needed economic boost, but there are significant concerns surrounding what the next Budget might hold for the economy and the knock-on effect could be damaging for many businesses teetering on the edge of collapse, as it seems certain many will have to deal with higher employee related taxes.”
UK consumer confidence rose 1.7 percentage points in the third quarter of 2024, according to the latest Deloitte Consumer Tracker, based on responses from 3,200 UK consumers aged 18+ between 6 and 8 September 2024.
All six measures of the index improved in Q3 2024, marking the eighth consecutive quarter of improvement to consumer confidence, taking it to its highest level since before the pandemic.
Céline Fenech, consumer insights lead at Deloitte, said: “This is driven in part by growing optimism about personal circumstances, bolstered by a strong labour market that instils confidence in job security and career opportunities.”
Shares in Microsalt jumped up by 60% yesterday but the company has issued a statement to the stock exchange this morning stating it was unclear on the reason.
The group, which makes salt with 50% less sodium and floated on AIM earlier this year, confirmed there was no trading or operational update, further to the statements made in its maiden interim results announcement on 27 September.
The Company also noted comments made in a recent UK Investor Magazine podcast, during which the interviewee indicated a hope for “blockbuster B2B and retail distribution agreements in the coming months”.
“MicroSalt wishes to emphasise these remarks were purely the opinion of the interviewee,” the group added. “The company re-confirms the statements it provided in its interim results announcement and will make further updates as appropriate in due course.”
Shares moved to 55p but remain down on May’s peak of 142p.
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