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Warm weather in the final week of the month, combined with the start of the Olympics, helped support food and drink sales. But the sharp fall in food inflation has dampened top line growth.
The three-month rolling average showed the growth of like-for-like non-food sales outpacing food sales for the first time since May 2010, driven by strong growth in clothing and footwear and toiletries and cosmetics. Discretionary and big-ticket items continued to struggle with sales growth promotion-driven.
Online (including mail-order and phone) sales of non-food items showed stronger growth, up 15.6% against growth of 9.6% last year. This marks the strongest growth this year.
Stephen Robertson, Director General, British Retail Consortium, said: "July was clearly not a golden month for retail. Like-for-like sales were virtually flat compared with a year ago and total growth of two per cent was still behind inflation as consumers, dealing with squeezed budgets, prioritised their spending on essentials.
"After the June wash-out, more wet weather in July continued to stifle demand for outdoor gear. There was a boost for food retailers towards the end of the month as the sunshine came out and shoppers started getting in party food and drink ahead of the Olympics but it wasn't a significant help.
"The brightest spot was clothing and footwear thanks to cooler weather coinciding with autumn ranges reaching the shops. Consumers responded enthusiastically to the chance to refresh their wardrobes with items they could make use of straightaway. Some retailers also benefitted from the longer Sunday opening hours brought in for the Olympic period.
"With only the opening couple of days of the Olympic Games covered by these statistics we'll have to wait a while to assess the overall impact on retail sales. Let's hope Team GB keeps on increasing its medal tally, bringing a feelgood factor that helps consumer confidence."
Helen Dickinson, Head of Retail, KPMG, said: "Sadly July was a lacklustre month and it's doubtful this trend will change as early expectations that the Olympics will raise retailers' fortunes look to be wide of the mark. Central London's retailers are already being hit hard by shoppers actively avoiding the capital. It's likely that any blip of benefit the games bring will be short lived.
"Sales of women's and children's footwear were the only highlight as families grappled with the ongoing effects of unseasonal weather. The lack of any feelgood factor encouraging consumers out into the shops has provided a set of figures much more indicative of the true underlying trend. These show weakness in sentiment as disposable incomes remain squeezed, despite the fall in headline inflation. It's a real challenge for retailers to grow sales and many are only achieving this at the expense of margins."
British Retail Consortium (BRC)
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