June 2022 ONS Retail Sales Data

June 2022 ONS Retail Sales Data

The June 2022 ONS Retail Sales Data report has showcased the latest trends and retail statistics. This article takes a look at key findings, offering expert opinions on what this means for the retail industry, as well as top tips to overcome challenges associated with the drop in sales.

Key findings from June 2022 ONS Retail Sales Data

  • Retail sales volumes fell by 0.1% in June 2022 following a fall of 0.8% in May 2022 (revised from a fall of 0.5%); sales volumes were 2.2% above their pre-coronavirus (COVID-19) February 2020 levels, but down over the past year.
  • Non-store retailing (predominantly online retailers) sales volumes fell by 3.7% in June 2022; sales volumes were 20.8% above their February 2020 levels.
  • Non-food stores sales volumes fell by 0.7% over the month because of falls in clothing stores (negative 4.7%) and household goods stores (negative 3.7%), such as furniture stores.
  • Food sales volumes rose by 3.1% with retailers confirming that increased sales were because of Queen’s Jubilee celebrations.
  • The proportion of retail sales online fell to 25.3% in June, its lowest proportion since March 2020 (22.8%), continuing a broad downward trend since its peak in February 2021 (37.4%).

What the experts have to say

Brian Atkinson, General Manager and Vice President of Five9 EMEA

“Another month bites the dust for retailers. While food sales rose during the jubilee, consumers will understandably be approaching this period of turmoil with caution and reigning in spending wherever possible. 

“Shoppers may be searching for the best deals and prices, but retailers mustn’t be complacent with customer service. One bad experience and it’s enough to put a customer off, no matter the price. 

“Attending to customers as quickly and effectively as possible will be key retaining customers and attracting new ones – whether it’s personalising communications with targeted loyalty programmes and relevant discount offerings, or using digital engagement channels to provide 24/7 self-service capabilities.  

“Price hikes and slowing sales and inevitable in the current climate. But brands can make sure they stand out among the crowd with next-level experiences that are anchored in empathy.”

Melissa Minkow, Director, Retail Strategy, CI&T

“That UK retail sales continued to decline in June, despite the Jubilee weekend celebrations, is a clear sign that consumers are tightening their purse strings. Retailers need to get creative in order to help shoppers through these tough times, but they must also take measures to protect themselves from the pressures of rising inflation.

“Ensuring supply and demand match as closely as possible is a crucial step that all retailers should be taking to mitigate the impact of inflation. Improving demand forecasting, and advancing the technology and modelling that supports subscription services, pre-order systems and loyalty programmes, can aid in predicting how much product should be manufactured – helping to avoid stock outs or, later on, excess out of season inventory. Relying less on imports and more on local sourcing can also facilitate a smoother supply chain and enable better control over the production and distribution process.

“Rather than slashing prices to get rid of old stock, retailers should also consider upcycling so that they’re not continually building inventory levels. Producing higher quality goods means less purchase churn within specific retail categories, due to a lack in need of replacing items. This is more profitable in the long term – not to mention far more sustainable.”

Sachin Jangam, Partner and CPG, Retail & Logistics Industry Lead at Infosys Consulting

“Retailers are being impacted hard by inflationary pressure, with sales continuing on a downward trajectory in June. It is clear retailers are stuck between a rock and a hard place – battling price hikes, increased transport and logistics costs, rising labour costs, while at serious risk of losing consumers and market share if they raise prices too high. 

“Food sales volumes may have increased by 3.1%, but this was boosted by the Jubilee weekend celebrations. We’re already seeing major players taking hits on their margins as consumers reign in spending. Retailers can ease this pain by realigning store ranges in line with consumer demand – for example, stocking up on frozen and canned goods that have a longer shelf life, as consumers opt for the cheaper alternatives. Retailers should also be focusing on their price match schemes to stay competitive, whilst negotiating hard with suppliers to keep prices down.

“Fashion retailers need to be even more careful with the right inventory planning, pricing, and promotion strategies as they are particularly vulnerable to risk, owing to seasonality. Right now, it’s the peak of holiday travel season based-demand, but they need to avoid their cash being blocked in the wrong inventory later down the line. 

“All retailers will be battling inflation for the next couple of years. Margins will continue to be squeezed, and while they can’t absorb all the costs of inflation, it’s likely they’ll become more agile when it comes to changing the mix in stores and optimising costs where possible.”

Silvia Rindone, EY UK&I Retail Lead

“Despite the long Jubilee bank holiday weekend at the start of June, today’s ONS retail sales data shows that consumers are feeling the pinch from the rising cost-of-living and are becoming more cautious about where and when they are spending. EY’s latest Future Consumer Index (FCI) found that 37% of low- and middle-income consumers are now only purchasing the essentials, compared to 26% in the last survey in February 2022, while 44% of low-income consumers are expecting their financial situation to worsen in the next 12 months. In stark contrast, just 15% of high-income consumers expect to be financially worse off in the next 12 months with 61% of this income bracket saying they are excited about spending money on things that will improve their lifestyle.

“The FCI data also highlights the growing disparities between these low-income consumers who are preparing to tighten their grip on finances and high-income consumers who are able to maintain spending levels – typical of a K-shaped recovery in which different groups experience different rates of recovery after a recession.

“A fall in consumer confidence is now having a clear impact on retailers’ bottom lines. EY-Parthenon’s profit warning analysis, released earlier this week, shows that half of all profit warnings issued in H1 2022 came from consumer-facing sectors, compared to a third in H1 2021, with most citing rising costs as the reason for the warning. The research underlines the difficulties companies face when trying to pass price increases on to consumers who are reducing their spending levels, which, in turn, is creating tensions along the supply chain and leading to high levels of unsold stock.

“Online retail sales also continued their downward trajectory. This was also reflected in the profit warnings analysis, with three-quarters of the FTSE Retailers issuing a warning in H1 2022 coming from companies which operate exclusively or mostly online. These companies have been particularly affected by the shift in sales back to ‘bricks and mortar’ stores and have been disproportionately affected by increasing delivery costs and product returns. 

“Companies which are managing to adapt to the challenges are those developing robust plans to manage cost inflation and who have strong processes in place around cash management and inventory visibility. They also need to ensure they address consumers’ affordability concerns by selecting the right value strategy to retain cost conscious shoppers such as offering value for money or ‘own label’ options.”

View the full June 2022 ONS Retail Sales Data report

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