Flat in-store sales signal further disappointment for UK high street – London Business News | London Wallet

Total retail sales in discretionary spend categories grew by +2.3% in February, compared to a negative base of -1.3% in the same month in 2024, according to BDO’s latest High Street Sales Tracker.

The latest report from accountancy and business advisory firm BDO shows that in store sales in lifestyle and fashion categories were below inflation, meaning that actual sales volumes shrank in February compared to the same month last year.

This persistent poor performance not only reflects that consumers continue to hold back on non-essential spending in light of persistently high household and food costs, but points to the longer-term decline of the UK high street.

Retailers faced particularly challenging conditions in-store, with growth of just +1.2% against a negative base -2.0% last year.

In-store fashion retailers registered no growth at all (+0.0%) in February, from a very negative base of -8.2% last year. These worrying results reflect the continued struggle for retailers to entice shoppers out onto high streets and get them spending in stores.

Sophie Michael, Head of Retail and Wholesale at BDO, said, “These results speak to the much reported and very concerning long-term decline in the UK high street. Retailers are struggling to justify investment in their store estates as consumers continue to move more online and spend less on discretionary items. Retailers have already been clear that they are planning to reduce capital investment in the next 12 months, exacerbating the fundamental challenges facing bricks-and-mortar retail – a sector that remains vital to local economies throughout the country.

“The fashion sector – traditionally a cornerstone of UK high streets – appears particularly vulnerable as consumers understandably prioritise spending on essential items. Heavy discounting is required to drive sales in this category, which is a tough call for retailers that are already operating on razor-thin margins.

“Looking ahead, the coming months will be challenging for retailers. We are edging closer to the introduction of National Insurance changes and increases to the National Living Wage, higher business rates and the Plastic Packaging Tax. These all come at once and put huge pressure on an industry that is already heavily challenged under the weight of its operating costs.

“We know the Government is firmly focussed on growth. Retailers urgently need support to navigate these mounting cost pressures or many may fail to remain competitive in an increasingly challenging market.”