UK retailers excited about Euro 2024 as sales soar | Retail industry

England's entry into the final of the men's European Football Championship helped fuel a recovery in retail sales across the UK in July, easing pressure on high streets following June's flop.

The Office for National Statistics (ONS) said retail sales rose 0.5 percent last month, in line with City economists' forecasts, after a 0.9 percent decline in June as bad weather deterred shoppers from spending.

However, given the cost of living crisis, households continued to hold back on major purchases.

Liz McKeown, director of economic statistics at the ONS, said the monthly spending increases were mainly seen in department stores and sporting goods shops. “Both the euro and the discounts in many shops [boosted] sales,” she said.

“These price increases were offset by a poor month for clothing and furniture stores and falling fuel sales, although prices at the pump fell.”

The latest snapshot showed growth in sales in the food, sporting goods and audiovisual sectors in a month framed by the final of the 2024 European Championships – in which England lost 2-1 to Spain – and the start of the Olympic Games in Paris.

Scotland also took part in the football tournament, but did not make it past the group stage.

Despite warmer weather, fashion sales were weak and spending on home goods and furniture also performed poorly as consumers focused their spending on summer experiences.

Kris Hamer, Director of Insight at the British Retail Consortium, said: “The high cost of living is still weighing on consumers, but with interest rates finally falling, retailers are confident that this will boost consumer confidence and therefore lead to higher spending, particularly as we look ahead to August.”

The Bank of England cut its base rate earlier this month for the first time since the start of the Covid pandemic, from 5.25 percent to 5 percent, helping to ease some of the pressure on households after the sharpest rise in borrowing costs since the 1980s.

A fall in inflation to more normal levels has also eased pressure on household budgets, although inflation rose slightly to 2.2% in July from 2% in June, according to figures released this week. Inflation peaked at over 11% two years ago due to rising energy and food prices triggered by Russia's large-scale invasion of Ukraine in 2022.

Kien Tan, senior retail consultant at accounting firm PwC UK, said: “Despite perhaps disappointing performance in parts of the retail sector in July, we expect a continued recovery in the short to medium term.”

“The arrival of summer weather this month will mean better news for the food and fashion sectors. And the more favourable economic conditions, with higher wages, lower inflation and lower interest rates, promise much more spending in the run-up to Christmas.”

Jacqui Baker, retail director at RSM UK and chair of the ICAEW retail group, said: “July saw summer finally arrive in the UK and households were able to get their barbecues out again. The summer of sport inspired consumers to invest in new sports equipment, while Euros, Wimbledon and Olympic fever swept the nation. The result of the general election in July also gave consumers some reassurance and led to a further improvement in consumer confidence.”