RSM comments on ONS retail sales figures for August

Commenting on today's retail sales statistics for August 2018 released by the Office of National Statistics, Andrew Westbrook, head of retail at audit, tax and consulting firm RSM said: 

'After a sales bounce in July, retail sales in August held up well, with the quantity of goods bought increasing by 0.3 per cent compared with the previous month. While the back-to-school campaigns might have failed to deliver an uptick in clothing sales, the good weather in August encouraged people to splash out on gardening and DIY projects - the latter a possible response to the slowdown in the housing market.

'The figures also showed a slight 0.2 per cent increase in the volume of petrol bought by consumers in August, suggesting a rise in days out and staycations. But the amount spent on petrol rose by 1.3 per cent, underlining the rise in the cost of fuel which was up by 11.3 per cent in August versus the same month last year.

'Online sales as a proportion of overall retailing remained at a record high of 18.2 per cent. A supplementary report issued today by the ONS also shows that pureplay online retailers are growing faster than multi-channel retailers. This might give the chancellor more reason to consider the introduction of a so-called Amazon tax. However, he will have to be mindful of the possible impact on physical retailers using online sales profits to offset store losses, or on those small retailers using online platforms. 

'Despite the broadly positive figures for August, the reduction in spend on clothing will be a cause for concern. We've recently seen further evidence of the pressures facing the high street with House of Fraser– and most recently Orla Kiely - falling into administration. 

'Retailers are finding the market difficult to read. They are also finding it difficult to plan. Many will face working capital pressures over the next few months as they stock up for the all-important Christmas shopping period. Some may find funding harder to come by as traditional lenders take a more cautious approach. Looking further ahead, some are also anticipating having to stockpile goods ahead of any eventual Brexit-related delivery delays in the first half of next year.

'Yesterday's rise in inflation, which came as something of a shock, has narrowed the gap with wage growth and could suppress consumer confidence and discretionary spending even further. Add to that wider concerns around high levels of household debt and the prospect of more rate rises, the outlook remains very challenging for retailers.'