June 6, 2011 12:01 am

UK high street spending falls in May

After splashing out over April’s double bank holiday weekends, UK shoppers tightened their purse strings in May, with fashion and homewares the worst affected areas of the high street.

The latest BDO monthly high street sales tracker shows that overall retail spending was flat, falling by 0.1 per cent in May compared to a year ago, but sales of homewares performed the weakest, ending the month down 7 per cent.

Shoppers may have flocked to buy summer clothes during warmer weather at the beginning of the month, but by the last week in May, fashion sales were down 10.4 per cent BDO said.

The data echo fears expressed by retailers that there has been a “pull forward” effect on consumer spending during the warmer weather, prompting many retail chains to start summer promotions earlier than usual in an effort to boost sales.

“Retail promotions are focused and narrow rather than broad and deep,” said Don Williams, partner at BDO. “Retailers are using them as a tool to drag customers over the threshold.”

Mr Williams believes consumers are delaying purchases of homewares, adding: “The pull-forward effect from the winter VAT increase has unwound now, and we are seeing that it is still incredibly tough to make sales in the homewares sector.”

Away from the high street, the level of internet purchases grew by 24.5 per cent year-on-year as consumers continue to embrace the convenience of the web, though this is about half the growth rate recorded a year ago.

This trend is also borne out in a separate survey by American Express, which reveals online spending grew 11 per cent in the first quarter of 2011, compared with a year previously. By comparison, physical retail sales dropped by 4 per cent in the same period.

“Retailers have grasped the huge potential of internet-based shopping by dramatically increasing their online offering,” said Sujata Bhatia, vice-president of American Express business insights.

The survey, which collates spending data from American Express cards, shows that online supermarkets and department stores have seen their share of total online spend reach 7 per cent in 2010, up from just
3 per cent three years ago.

Women are moving their shopping habits online faster than men, with the number of female internet shoppers increasing 23 per cent in the same period, compared with a rise of 16 per cent in male shoppers.

“Multiple category” shoppers, who buy from more than one category of online retailer, have risen to 50 per cent of all shoppers, from 34 per cent three years ago.

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