According to the report, strong like-for-like (LFL) sales throughout the month carried January to the best monthly result since July 2022 and marked the 23rd consecutive month of positive total LFL sales.
However, while the overall figures were positive, they were only slightly above the UK’s high inflation rate, with Brits still spending less on non-essentials due to the rising cost of living and the increasing gap between wages and inflation.
According to BDO, total LFL sales, combined in-store and online, grew by +10.9 per cent in January. Total in-store LFLs jumped by an impressive +19.5 per cent in the month from a strong base in January 2022, when results were compared to figures from the 2021 lockdown. However, it was a disappointing month for online sales, with total non-store LFLs rising by just +4.1 per cent from a negative base of -2.7 per cent for January last year.
The year got off to a good start, with LFLs jumping +14.62 per cent in the first week of the month and a jump of +13.67 per cent in week two from a strong base and in the third week of the month, total LFLs grew by +12.79 per cent. The final two weeks saw total LFL sales climb again by +11.96 per cent and +10.20 per cent, respectively. However, despite these positive results, online sales fell to their lowest figure since October 2020, growing a mere +0.31 per cent.
The fashion sector drove overall figures this month, with total LFLs climbing an impressive +20.1 per cent. These figures marked the 23rd consecutive positive month for total LFLs for the sector. In-store LFLs saw particularly strong performance, jumping by +26.1 per cent, the category’s strongest result since July 2022.
January saw total LFL sales in the lifestyle category grew by +7.6 per cent, its second consecutive month of positive LFL results and the sector’s second-highest LFL sales since July 2022. In-store LFLs also remained positive throughout the month, growing by +16.7 per cent.
But it wasn’t all positive throughout January. Total LFLs for the homeware sector fell by -5.4 per cent with a particularly poor performance in online sales. However, despite these negative figures, in-store homeware LFLs saw a marginally better result, rising by +2.1 per cent in the month compared to January 2022.
Sophie Michael, head of retail and wholesale at BDO LLP, said although these results look positive at first glance, they are masking a very different picture.
“What we can see is that perhaps many consumers postponed December spending in order to wait for the January sales to try and bag a bargain and make their money go further,” she said.
“There is a positive given the strong in-store figures pointing to the return of the high street. This perhaps demonstrates also that each purchase of non-discretionary spend is more considered given the tighter consumer purse resulting in people wanting to see the item before committing.
“As the gap between consumer wages and inflation continues to grow, and essential spend takes a greater share of the purse, consumers are far more selective, and retailers will be having to work harder to differentiate their offering through product and value.
“With inflation impacting costs across all sectors, including food in particular, we are expecting to see discretionary spending fall across the year as consumers prioritise essential spending. Given the expected downturn in discretionary spend, retailers will therefore be focused on managing working capital and inventory levels, all within an inflationary environment.”
