Retail’s Rough Patch: Discretionary Sales Slip in May
In May, typical retail sales in the discretionary realm dipped -1.2%, down from a bright +2.3% in the same month last year. BDO’s latest HST report shows the culprit: a road‑bump in non‑store sales that fell a solid -3.1% from May 2024.
Online Sales: A Bitter Turn
After a Black Friday boom last November and a fairly positive run through March, online sales are the first to hit negative territory since March 2024. That’s rough news for e‑commerces that had been riding a sales wave.
Whole‑Market Slump
- All discretionary categories underperformed, lying far below inflationary levels.
- Fashion suffered a -2.0% drag, largely due to a -4.5% hit in online fashion sales.
- Homewares fell a further -3.1% from a negative base, marking the third straight month of falling online homeware sales at a steep -10.8%.
Barrett’s Perspective
Sophie Michael, Head of Retail & Wholesale at BDO expressed disappointment, saying the results signal a hard‑knock reality for retailers as we head into summer:
“Retailers have been warning about inflation‑driven cost spikes for a while, and now the cracks show. The steep decline in non‑store sales highlights how hard it is for stores to offer the huge discounts that once fueled online growth. Wages, high operating costs, and the newest tax changes—like National Insurance tweaks, the living wage uptick, packaging tax, and higher business rates—are all taking a bite out of margins.”
“Consumer confidence is at its lowest in five years, so people cut back on non‑essential spending. Retailers are squeezed on both sides—costs climbing, demand folding—making it crucial to stay sharp about capital allocation, staffing, and overhead management.”
Weekly Breakdown
The month’s data shows a non‑linear story:
- Week 1: modest rise of +0.25%.
- Week 2: biggest drop, -3.33%, driven by lingering online weakness.
- Week 3: decline across every category.
- Week 4: another slip of -0.84%, closing the month on a negative note.
Wrapping Up
In a nutshell: higher costs, lower consumer willingness, and a challenging digital marketplace have left retailers with a complicated road ahead. Staying lean, prioritising critical investment, and reshaping the customer journey will be key if the sector is to thrive beyond this lull.
Stay informed—keep a watchful eye on these market trends and be ready to adapt when the next wave rolls in.
