Warning as High Street faces ‘perfect storm’ of challenges

Despite deep autumn discounting and early seasonal promotions, high street sales collapsed in the last week of October following further Brexit delays and the announcement of a December general election.

According to the BDO High Street Sales Tracker, total like-for-like in-store sales only managed a marginal +0.7% increase in October and failed to offset a negative base of -2.0% in October 2018, as consumers become increasingly sensitive to the political chaos.

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 total in-store like-for-like sales plummet -6.45% from a base of -0.30%.

In-store like-for-like sales were positive for two out of the three sectors in October (homewares and fashion), while lifestyle recorded a decrease of -1.9%. BDO says that 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%.
Away from the high street, non-store like-for-like sales grew by +17.4% from a base of +10.5% last year, 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. Retailers stockpiling for a Brexit date that was ultimately delayed has only further alienated the relationship between retailers and government. 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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