UK online sales continue to grow while high street sales flatline

Total like-for-like UK retail sales in discretionary categories, such as fashion, homewares and lifestyle, remained below inflation in June, compared to a positive base of +3.2 percent in June 2024, according to the latest High Street Sales Tracker from accountancy and business advisory firm BDO.

This was driven largely by low sales growth in stores, at just +0.6 percent compared to June 2024, reflecting how the high street continues to struggle to attract shoppers and consumers spending, as online sales grew +4.3 percent.

The growth in online sales was particularly evident in the fashion sector, up +10 percent in June, compared to a -0.2 percent decline on the high street, showing the growing gap between brick-and-mortar and online shopping.

BDO notes that this is the sixth consecutive month that in-store sales growth has been below the rate of inflation, which means that sales volumes are significantly down in the first half of this year.

Sophie Michael, head of retail and wholesale at BDO, said in a statement: “Consumer spending continues to be challenged, with little optimism for retailers. We know that consumers are being incredibly cautious when it comes to discretionary spend, given the significant noise around rising job losses and volatility in the geopolitical landscape.

“There is also a growing gap between the performance of physical stores and online retail. Perhaps this is because online retailers have greater agility to adjust their inventory and promotional material to quickly align to consumer preferences, such as promoting summer outfits in extreme high temperatures and pivoting to waterproofs when the rain arrives.

“Some retailers are making targeted investments to improve their store estates to attract more footfall, but we need to see this across the industry along with more support to revitalise our high streets. Store propositions need to be reinvented. Strategic and targeted investment is what is really required for retailers with a significant physical footprint to remain competitive. At the same time, retailers need to continue to invest in blending their physical and online offerings. Without this investment and local government support, we risk seeing further store closures which has a detrimental effect on our towns and communities.”