High street sales flatline as inflation leaves consumers ‘under huge pressure’

Total like-for-like retail sales (both in-store and online) grew by just 2.8% in July, compared to 3% for the same period in 2024, according to the latest BDO High Street Sales Tracker.

Sales from stores grew by just 0.8% compared to the same period in July 2024, which BDO said delivered a result “significantly below inflation and therefore a reduction to volumes once again”.

By comparison, online sales grew 8.3% compared to the same month in 2024, effectively propping up the UK retail sector.

BDO said this was the seventh consecutive month of lower in-store sales, which reflected “the sector’s ongoing struggle to get shoppers out onto the high street and spending money”.

Physical fashion stores in particular struggled during the period, with in-store sales inching up just 1.3% compared to a 10.1% jump in online purchases.

BDO head of retail and wholesale Sophie Michael said: “Consumers are under huge pressure. Food inflation remains stubbornly high and this is leaving shoppers with very little disposable income for non-essential spend.

“We naturally expect retail sales to be challenging during the school holidays as families fly overseas and prioritise disposable income in spending on experiences and social activities. But this month’s figures point both to a longer-term trend – the strengthening of online retail’s supremacy over the high street – and the economic challenges the UK is facing.

“There have also been recent reports of the return of the ‘lipstick effect’ on consumers as they look to small, affordable treats like lipstick to lift their mood during an economic squeeze. By offering affordable, luxury items, retailers may be able to attract the consumer in for larger spends. August may be a difficult month to ramp up sales, but retailers need to do everything they can to convert summer stock to sales revenue.”