Online splurge gives retailers unexpected boost in July – ONS

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Sales were up when most economists predicted a decline.

Shoppers in Britain have given retailers a surprise boost in July, helped by the strongest growth in online since May 2016.

Figures from the Office for National Statistics (ONS) showed that monthly retail sales volume rose by 0.2%, well ahead of a decline predicted by most economists.

Sales were up by 3.3% for the month compared with July 2018, beating forecasts – but lower than June’s 3.8% growth.

In the three months to July, retail sales grew by 0.5%, the smallest increase this year and reflecting a drop in sales volumes in May.

Consumers appear to have been helped by the modest inflation and strong wage growth not seen in 11 years.

Online sales soared by 6.9% on the month, their biggest rise in three years, partly helped by Amazon’s “Prime Day” promotions.

Department stores also received a boost for the first time this year.

The figures from the ONS contrast to the survey by the British Retail Consortium last week that showed retail spending fell in July at the fastest pace on record.

Stores selling household goods however saw their sharpest fall in two years, down by 5.4%, with the warm weather keeping shoppers out of furniture and lighting stores.

Duncan Brewer, Retail and Consumer Partner at global management consultancy Oliver Wyman however warned that this is further evidence pointing to the continued shift towards online shopping.

He said: “As our high streets keep feeling the heat, there is no way back from the road towards online shopping.

“Our research shows that 75% of purchases during heavy discounting periods cannibalise full-price sales, as UK shoppers look to buy planned purchases rather than new, spontaneous products.”

The report also suggests that consumers could hold back on spending ahead of the 31 October when the UK is scheduled to leave the European Union.

The Bank of England has previously warned that household’s savings relative to their incomes are not far off record low levels, which could translate to disappointing sales for retailers as Britain’s political crisis drags on.

Mr Brewer added: “Shoppers will likely buy their Christmas shopping ahead of the 31st October deadline to avoid higher prices due to increased tariffs in the case of a No-Deal Brexit.”

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