A surprise announcement: the Office of National Statistics published the retail sales figures for June, and they… weren’t too bad. Previous economic indicators had suggested that the outlook was not especially promising; I even wrote recently about how retailers could try to enjoy a better July! Sometimes I think I’m wasting my breath.
It’s a nuanced picture, though. The quantity bought in June was up 1% from May, and 0.7% in the three months to June, but that contrasted with a 1.6% increase in the three months to May. However you cut it, this still represents a retail slowdown. Interestingly, the proportion of online sales compared to total spend fell, from 19.3% to 18.9%, which is hard to understand. Perhaps it is linked to June’s better weather (though the climate was far from perfect last month), but equally the difference is small enough simply to be a statistical blip. Nonetheless, it’s something that you note and mark with a sign saying ‘Interesting’.
There are some other curious aspects to the breakdown of the sales figures. Department stores are continuing to flounder in the current economic seas, like a large freighter caught too near the coast. And yet there is growth in some unexpected areas, such as second-hand stores like charity shops and antiques dealers. Is this an indication of increasing thrift among consumers, or changing product tastes? Is it sustainable growth? Can we rely on second-hand stores to keep an economy afloat?
One aspect of the plight of department stores we should note is the decline in non-food sales. These represented a fall of -0.2% for the amount spent and -0.4% for the quantity bought, the sixth consecutive month of decline. Can we see a link between the decline in the purchase of ‘hard goods’ and the increase in sales in charity shops and other second-hand outlets? Are careful customers making more cautious spending decisions, expanding the range of retailers to benefit from their patronage? What does this mean for the high street?
You won’t be surprised that I return to the high street, I make no apology for saying that the future of the high street is my passion and, some would say, my obsession. Maybe I’m just a contrarian, but every time I read the commentary about “high street crisis” and “the death of the high street”, my hackles rise. It’s so unimaginative and predictable. I’m the first person to admit that the high street isn’t enjoying a retail boom at the moment, but I think the freighter I talked about earlier is still afloat and fundamentally seaworthy. It just needs a change of direction, a new navigator, or at least some new charts.
A case in point: House of Fraser. We all watched it skim so close to the rocks, as if disaster was certain. Lifeline after lifeline was thrown, but to no effect, and it looked for a while as if the jagged teeth of the shore were simply too close, as if it was only a matter of time before rock split steel wide open and the salty water poured in. The company still went into administration, but there are glimmers of hope that it can be revived as a sustainable business, its course altered under the new ownership and stewardship of Mike Ashley.
The growth in second-hand sales is instructive too. One striking factor of charity shops, antiques dealers and so on is that they are, overwhelmingly, high street outlets, not marooned in hyperstore retail parks on the edge of town. If this trend persists, it could be an indication that people want to shop local and independent, and that could be great news for the high street sector.
To sum up, the June figures are not quite what we expected, but they’re not outliers, either. There are some interesting indicators which may be signposts, or could be mere weather vanes. We won’t know for months, maybe years. But I’m not dissuaded in any way from my view that everything is to play for in UK retail. So, don’t expect me to stop going on about the high street just yet! The future’s only just getting interesting…