Britain’s hot summer has masked the weakness of consumer demand by prompting the sharpest monthly growth in food spending in five years, the latest snapshot of the high street has shown.
The British Retail Consortium (BRC) said the main beneficiaries of the long, dry spell were supermarkets and pubs as well as shops selling fans and other cooling equipment, but that other parts of the sector suffered.
Food retailers reported their best sales for July in five years as households prepared for barbecues and picnics but the extra spending came at the expense of stores selling goods for the home.
The BRC said that in the three months to July, food sales were up by 4.5% while non-food sales declined by 1.2%.
Helen Dickinson, the BRC’s chief executive, said: “Last month’s sweltering temperatures kept shoppers focused on eating, drinking and keeping cool. Food sales had their best July in five years, while fans and cooling equipment flew off the shelves.
“However, total sales growth slowed as the heat laid bare the underlying weakness in consumer spending. Sales of non-food products struggled. Three months into an extended period of summer weather, demand for many seasonal purchases has slowed while the heat has kept shoppers away from days spent browsing new ranges. For many in the industry, autumn could not come sooner.”
Dickinson said traditional high street retailers were suffering from the twin effect of lower consumer footfall and rising business rates. With household budgets squeezed, the past year had led to in-store sales of non-food products falling by 2.5% at a time when business rates increased by almost 3%.
“Although changing consumer behaviour means we will have fewer shops in future, the reality is that if we want to support a positive reinvention of our high streets, business rates cannot go on increasing.”
A separate report from Barclaycard found that the England football team’s better-than-expected performance at the World Cup boosted pub takings. They rose by 73% on the day of the semi-final against Croatia.
Barclaycard said spending was up by 5% in July but Esme Harwood, a director at the company, said: “It will be interesting to see if this strong level of growth continues as we move into the final stretch of summer. It’s clear that some consumers remain cautious about what’s to come, with interest rates rising and overall confidence in household finances down slightly from June.”