Government figures show the amount of goods we bought in August fell by -1.6% compared to July, and -5.4% against August 2021.
ParcelHero warned online spending was hit particularly hard – the amount we spent online plummeted -9.5% compared to last year due to the dramatic rise in the cost of living.
Today’s Office for National Statistics (ONS) retail sales figures for August make grim reading for retailers. They reveal a -1.6% fall in the amount of goods we bought compared to July. The result is even worse compared to the same month last year, down -5.4%.
ParcelHero said e-commerce sales were hit particularly hard. The value of online sales plummeted by -9.5% in August compared to the same month the previous year and -3.6% compared to July.
David Jinks, Head of Consumer Research, ParcelHero, said:
"These figures are worse than most analysts had predicted, and highlight how much shoppers drew in their horns this summer as shopping and energy bills soared. Not only did the number of items we purchased fall by -1.6% in August compared to July, but the amount of money we spent tumbled by -1.7%. Most experts had predicted a fall in sales volumes of just 0.5%.
"Online sales suffered particularly badly as shoppers cut back on all non-essential spending. The amount they spent online fell -3.6% against July and -9.5% against August 2021. Worst hit were online household goods sales, down -9% compared to July and an astonishing -16.3% year on year.
"The reason for the collapse in spending, both on the High Street and online, is not hard to see. Consumer spending was actually up by 5.4% overall compared to August 2021, but the amount of goods we bought was a dark mirror image, down by -5.4%. To put it starkly, we spent more to buy less.
"Looking back, August was actually a model of stability compared to the upheavals of this month. Consumer confidence is highly unlikely to grow significantly in the short term. The new Chancellor, Kwasi Kwarteng, is due to reveal a mini budget next Friday (23 September) that is expected to include new tax cuts and more details on energy caps. Retailers will be hoping this will restore confidence but the jury is out on whether consumers will think tax cuts are the answer to our problems.
"An omnichannel approach is vital for all retailers looking to make the most of this unexpected rise in spending while it lasts. ParcelHero’s influential report “2030: Death of the High Street” has been discussed in Parliament. It reveals that, unless retailers develop an omnichannel approach, embracing both online and physical store sales, the High Street as we know it will reach a dead-end by 2030."