These last few summer months brought good sales for many as the sun shone on retailers as well as holidaymakers. As today’s rise in retail sales offers futher good news, Retail Week takes a look at how each sector is performing.

Oxford Street shoppers

Retail sales have been on the rise for the past four months, according to the BRC-KPMG Retail Sales Monitor. July brought the best performance in seven years and the good run continued into August, when like-for-likes rose 1.8%.

It’s not just retail which seems to be showing green shoots. UK GDP grew by 0.7% in the second quarter, following a 0.3% rise in the first quarter.

Managing director at retail research company Conlumino, Neil Saunders, says the fact that signs of economic improvement have been coming through over a number of months is making people think the shift could be sustainable.

“The better news on the economy really seems to have filtered through quite strongly to consumer confidence,” he says. “The fact that we’re seeing a marked improvement in big ticket items suggests that [the mood] is changing.”

Consumer confidence reached a four-year high in August, according to monitor GfK. Confidence rose five points during the month, although people were no more positive about their own finances.

GfK managing director of social research Nick Moon says: “The explanation probably lies in the fact that there has been a steady flow of economic good news over the past few months showing the economy growing.”

However, a big contributor to retail sales growth has undoubtedly been the hot spell, especially in fashion and food, with shoppers picking up summer dresses and barbecued meats.

“There’s definitely been a temporary boost because of the weather,” says Saunders. “Although retailers are feeling more confident there will still be a sense of caution. Things are going in the right direction but we’re not going out of the woods yet.

“With UK living standards at their lowest for a decade, the British public’s economic confidence continues to grow strongly – a conundrum of Alice in Wonderland proportions.”

FOOD

The grocers will have welcomed this summer’s sunny skies with zeal because the correlation between good weather and healthy trading is strong. BRC data showed food like-for-likes rose 1.6% in the three months to the end of July, while Tesco’s Quarterly Consumer Update for the same period showed an upward trajectory.

In July, sales of ice creams, fresh food, barbecue products and alcohol boomed. Sainsbury’s sold 1.2 million packets of sausages in a single week, a number which would stretch from London to Alicante if laid out in a line.

The Asda Income Tracker also showed a gradually improving picture as discretionary household spending improved.

However, figures released by data company Nielsen last week showed that trading momentum ebbed in August, when sales values rose 1.4% year-on-year driven by inflation and volumes fell by 1.8%.

Shore Capital analyst Clive Black said: “While we had anticipated a deceleration in trading momentum, especially given the challenging comparative against the London Olympics, when trade was boosted as many consumed food & drink as they watched Britain’s successful campaign, we are a little surprised and disappointed by the magnitude of the deceleration month-on-month.”

The British Retail Consortium (BRC) reported that food in August was the slowest-growing category, squeezed between a record month of July and a very strong August 2012. “Fewer distractions from sporting exploits this year meant there was more cooking and gardening,” the BRC says. “The contrast with last year also showed in the choice of products, which became more homely and wintry when the temperatures cooled off but included more fruits and picnic favourites in the warmer days.”

IGD chief executive Joanne Denney-Finch said: “August’s food and drink sales were always going to have challenging comparatives because of July’s unusually hot weather and last year’s Olympics. Despite this, the beginning and end of the month had relatively strong total sales.”

Although the picture for the retail sector may generally look more positive ahead of the crucial Christmas period, it appears likely food spending habits honed during the downturn will continue.

“People will continue to be polarised, trading up to Waitrose and then down to commodity dry groceries in Aldi and Lidl,” says Capgemini UK vice president Chris Webster. “People have worked out they can eat healthily and save money – why not save money on commodities and feed yourself on upmarket food at home?”

ELECTRICALS

The electricals sector had a mixed summer as the hot weather drove a boom in certain products while others struggled. Dixons reported sales of juicers rocketed 2,422% year-on-year in a single week in July while0air conditioning systems also soared.

Play.com reported ice cream machines clocked up a cool 165% rise. But the BRC said in July that tough comparatives against last year’s summer of sport had hit TVs while even tablets had plateaued after previously strong growth. The gaming market also suffered.

The picture in August, however, was rosier, as the back-to-school and university season generated interest for tablets and laptops. “TV sets have reached the end of the hard comparative generated by last year’s switchover and large electricals still benefit from Comet’s market share,” the BRC says.

Independent retail analyst Nick Bubb notes: “The summer was a game of two halves for electricals, with sales wilting in the heat in July, then bouncing back in the cooler weather of August, as can be seen from the weekly John Lewis sales pattern.”

GfK’s consumer confidence barometer for August, released last week, showed the climate for major purchases rose five points to -16, providing good news for big ticket electricals.

Bubb warns Dixons will have to “fight hard” to continue to narrow the price gap against pureplays including Amazon and the remainder of the year could hold mixed fortunes.

“It does feel like the market has good momentum across the board in technology, from TVs and tablets to high-end cameras, while the housing market recovery bodes well for white goods.”

With the launch of new Apple products including the Mac Pro desktop computer and new iPhone this autumn, as well as Samsung’s smartwatch, the momentum may well continue.

HOME AND DIY

Furniture retailers tend to love rain but hate the sun, so while the rest of the high street basked in a golden July, furniture and flooring retailers suffered their worst trading performance since August 2012, excluding Christmas.

Consumers steered clear of retail parks and thoughts of sprucing up their homes were far from front of mind. August proved better and the BRC said sales “sprung to life” in furniture and flooring and that it was the best performing category in August – the best month since March 2010. Retailers enjoyed growth across all ranges, notably in living room and dining room furniture, which underperformed over the last few years.

Sales of outdoor furniture across the two months were up as shoppers beautified their gardens to take advantage of the warm weather. The heatwave also sparked demand for fans and sprinklers, as well as gardening items in general, including outdoor paint.

Trading conditions are expected to pick up for the rest of the year, driven by cooler weather and a more buoyant housing market. House prices rose 1.4% in the three months to the end of August compared with the previous three months, representing the biggest increase since mid-2010, according to building society Nationwide.

The warmer weather did wonders for DIY retailers. Strong sales in July and August helping to offset challenging trading conditions in the wet spring – a critical time for home improvement retailers. DIY retailers are also likely to benefit from the expected continued uptick in the housing market, driven in part by Government initiatives such as the Help to Buy scheme, which is enabling first-time buyers get on the property ladder.

HEALTH AND BEAUTY

The health and beauty sector had a good July, recording the second strongest growth across non-food retail, according to the BRC. As Brits sizzled in the sunshine, sales of skincare products and sun cream boomed as shoppers needed it in the UK as well as for their holidays. Sales of hay fever medicines and plasters were also strong.

The BRC also reported relatively high-price products such as fragrances remained popular while shoppers still favoured lower-price own label products for day-to-day purchases like toiletries.

However, this momentum did not carry through into August when health and beauty became the second worst performing category. “After a very good month of July, the appetite for sun creams and seasonal products had faded by August,” the BRC says.

“The dry and sunny summer meant that there was less demand for cough and cold medicines this year than after the poor summer of 2012. The best lines were the ones benefiting from promotional activity and the new celebrity-themed ones.”

The sector’s biggest player, Boots, will hope that its new advertising campaign featuring “real women”, which debuted in August, has helped it defy the wider industry experience.

Conlumino managing director Neil Saunders says: “Health and beauty has been a hero of the downturn. The long-term prospects are very positive, especially with an aging population.

“There’s real growth in beauty and room to be optimistic. However we’ve seen more players entering the sector, making it a lot more competitive.”

FASHION

Fashion was a star performer in July as shoppers grabbed summer dresses, swimwear and accessories to make the most of the heat wave.

Kantar Worldpanel data showed that fashion volumes grew at the strongest rate in more than two years in the twelve weeks to July 7, at 0.3%, as values rose 3.2%.

However, Kantar Worldpanel client manager Glen Tooke points out that, despite the promising July results, the trend for falling volumes continued in August and value growth dropped back to 0.8%.

“July was an anomaly,” he says. “Even if people are feeling more confident they don’t have money to throw around. It was driven entirely by women’s clothing and footwear as men will just get last year’s shorts out of the wardrobe. The demand has been driven by the weather.”

With the weather identified as the main driver of the purple patch, retailers will be hoping that Mother Nature does her job and brings traditional autumnal weather to help kick-start autumn sales.

The BRC-KPMG Retail Sales Monitor highlighted that the prolonged sunshine in August meant retailers which still had summer products experienced strong demand but, on the flip side, autumn ranges suffered and some retailers already started to mark down current season stock.

Conlumino’s Saunders says: “We need a short, sharp cold snap to get autumn/winter stock moving. People will put off buying a big winter coat as they are generally more expensive than summer clothes. They need a good reason to buy.”