The latest report from the Office for National Statistics (ONS) reveals that the UK saw a marginal rise in retail sales volumes in May 2023, persisting with the positive momentum initiated in April. Sales volumes grew by an estimated 0.3% in May, following on from a 0.5% increase in April, underlining an optimistic forecast for the market.

The growth in May was driven by strong performance in the non-store retailing sector, which saw sales volumes increase by a robust 2.7%. This surge was fuelled by online retailers who experienced a sharp uptick in sales of outdoor-related goods and summer clothing. The robust performance of online retailers is largely attributed to the warm weather experienced in the latter half of May, which encouraged consumer spending on summer goods.

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The automotive fuel sector also rebounded in May, with sales volumes climbing 1.7%. This follows a dip of the same magnitude in April. Despite the growth, the sector’s sales volumes remain 9.5% below pre-coronavirus (COVID-19) levels observed in February 2020.

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However, it was not all positive news across the board. The food stores sector experienced a downturn, with sales volumes slipping by 0.5% in May. This is partly due to the increased spending on takeaways and fast food, which was stimulated by an extra bank holiday during the month. Retailers also reported that the increased cost of living and escalating food prices continue to weigh on sales volumes.

Likewise, non-food stores witnessed a slight dip in their sales volumes, which contracted by 0.2% in May, reversing the 0.9% growth recorded in April. This is indicative of the ongoing volatility in the retail industry as it navigates post-pandemic recovery and evolving consumer trends.

Despite the mixed results, the overall uptick in retail sales volumes provides cautious optimism for the sector as it continues to recover and adapt to the shifting consumer behaviour post-pandemic. However, the impact of increasing living costs and food prices on consumer spending, particularly in the food retail sector, will be a critical factor to watch in the coming months.

Jon Boland, General Manager of Clover UK, commented: “It is good news for both retailers and the wider economy that sales have held up better than expected. In May, consumers continued to spend despite inflation weighing on disposable incomes.

Analysing our client base of more than 80,000 small and medium enterprises (SMEs) in the UK, we can see a couple of seasonal and structural drivers at play.

Firstly, consumers took advantage of improving weather and the extra bank holiday in May to increase their purchases of gardening supplies and accessories. Our data shows that card-based spending at garden centres rose substantially in the month. We are also seeing consumers look for value, seeking out discounts and deals to make their money work harder. Underscoring this is the fact that card-based spending at discount stores was up in May. With inflation persisting, this drive to value is unlikely to lose steam any time soon. In addition, we are seeing a decline in sales at pubs and tourist attractions as consumers become more selective with their discretionary spending.