Fashion sales up but markdowns ruled in October, and Brexit is to blame says BDO
today Nov 8, 2019
Fashion retail may be hugely challenged in the UK but a new report on Friday showed that sales in the sector managed to rise in October, albeit not by a lot. But the benefit of those higher sales was affected by the deep discounting that was seen last month and this was a feature of the entire retail sector, not just fashion.
That's according to the latest BDO High Street Sales Tracker, which said that high street sales actually “collapsed” in the last week of October following further Brexit delays and the announcement of a December general election.
While the first three weeks of the month saw a boost for in-store like-for-like sales, despite poor footfall and challenging weather conditions, the final week saw them plummeting 6.45% from a base of -0.3%. Overall, total like-for-like in-store sales only managed a marginal 0.7% increase in October and failed to recover from the 2% fall of October 2018, as consumers became increasingly sensitive to the political chaos.
“Retailers are set to enter the vital Christmas trading period facing a perfect storm of unfavourable conditions,” BDO said.
As mentioned, fashion managed a 1.7% rise and homewares rose an even better 6.6%. But lifestyle (which means hotel stays, sporting goods, hair and beauty, restaurants and culture outings), fell 1.9%. Worryingly, this marks the 21st consecutive month of no growth for the lifestyle sector in-store — the sector "most indicative of discretionary spend" — as retailers began the ‘golden’ quarter and prepared for the crucial Christmas trading period.
Overall footfall fell every week in October compared with the same period in 2018, starting with a decline of 1.8% and concluding with its largest fall of 5.3%.
But BDO also said non-store like-for-like sales grew by 17.4%, much better than the 10.5% last October, suggesting that shoppers still took some advantage of the deeper discounts and earlier seasonal promotions than last year.
Sophie Michael, Head of Retail and Wholesale at BDO LLP, said: “Consumers were delivered a double blow of yet another Brexit delay combined with news of a general election during the crucial festive trading period. While the first three weeks of October may have brought hope to the high street, the final week was awful and came very close to negating the positive gains in the first weeks of October.
“Consumer confidence will have been further deteriorated by news of the collapse of major high street employer and well-loved brand Mothercare – the latest victim of relentless high street transformation. As retailers continue to trade on paper-thin margins, and their pleas for business rates reform remain ignored, they enter the vital Christmas trading period facing a perfect storm of unfavourable conditions.”
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