Soaring temperatures boosted demand for air conditioners, outdoor goods and clothing, helping retailers beat expectations in June. Online sales reached their highest share of retail spending in five years last month as hot weather and World Cup spending supported the market.
The Office for National Statistics (ONS) said the volume of retail sales in Great Britain rose 1% month on month in June, beating analysts’ expectations of a 0.3% decline. Heatwave conditions pushed year-on-year sales up 4.2% in June, almost double analysts’ expectations of 2.3%.
Hannah Finselbach, a senior statistician at the ONS, said:
“With internet retailers faring well, the proportion of online sales has risen to its highest since spring 2021, when coronavirus restrictions were ending.”
After a revised 0.7% monthly fall in sales in April, the latest rise helped drive overall retail sales growth of 0.6% in the three months to the end of June, compared with the previous quarter.
How did online retailers perform?
Non-store retailers, primarily online businesses, enjoyed another bumper month, with sales soaring 4.4% in June. That was down on the 6.1% growth recorded the previous month and 3.8% quarter on quarter.
Sales across online channels were supported by demand for seasonal items and clothing as consumers responded to the hot weather.
Which stores saw the biggest gains?
Clothing and footwear retailers also had a strong month, with sales rising 1.9% from May. Clothing store sales increased 1.9% month on month, the biggest rise since September.
Sales at other non-food stores – retailers that are not clothing, household goods or department stores – rose 1.8% month on month, driven by computer and telecoms retailers.
Department stores, however, reported a 1.7% monthly decline in sales after a 2.5% rise in May, when shoppers bought fans and paddling pools during the hot weather. Household goods retailers also reported weaker sales, down 0.6% month on month.
What did analysts say about the outlook?
Samuel Edwards, the head of client portfolio management at the financial services firm Ebury, said:
“Retailers scored an early summer goal in June, with retail sales outperforming expectations as warm weather, promotions and World Cup fever helped unlock consumer spending.”
While the so-called and World Cup merriment had helped consumer confidence levels jump by the, Edwards warned that retailers still faced potential headwinds. He said the, persistently elevated interest rates and the inflationary pressures stemming from renewed tension in the Middle East could dent consumer confidence.
Melissa Minkow, the global director of retail strategy at CI&T, said:
“Warm weather did a lot of the work for retailers in June. July’s figures will be an interesting watch, because we’ll see a response to Burnham’s cost of living policies come into play.
“Consumers tend to either pull back if they expect new policies to limit their funds or spend more if they think they’ll be good for their wallets.”
Retailers therefore face a mix of supportive summer demand and possible economic pressure in the months ahead, with consumer confidence likely to be a key factor.
Key Facts
- Online sales reached their highest share of retail spending in five years in June.
- Great Britain retail sales volume rose 1% month on month, versus forecasts for a 0.3% decline.
- Year-on-year sales rose 4.2%, almost double the expected 2.3% increase.
- Non-store retailers saw sales rise 4.4% in June.
- Clothing and footwear sales rose 1.9% month on month.
