Retail sales fall by 0.9% in September as cost of living crisis bites

Retail sales volumes fell by 0.9% in September 2023, following an unrevised rise of 0.4% in August 2023, according to official data published this morning. Analysts had predicted a 0.3% fall.

Looking at the quarterly picture, sales volumes fell by 0.8% in the three months to September 2023 when compared with the previous three months.

Non-food stores sales volumes fell by 1.9% in September 2023, with retailers reporting that the fall over the month was because of continuing cost of living pressures, alongside the unseasonably warm weather reducing sales of autumn-wear clothing.

Meanwhile, non-store retailing (predominantly online retailers) sales volumes fell by 2.2% in September 2023, following a fall of 0.9% in August. Food stores sales volumes rose by 0.2% in September 2023, following a rise of 1.4% in August 2023, while automotive fuel sales volumes rose by 0.8% in September 2023, rebounding from a fall of 1.0% in August 2023.

Grant Fitzner, chief economist at the Office for National Statistics, highlighted the difficult position many retailers are in and the impact of the warmer weather: “Retail sales fell notably in September, with retailers telling us that cost-of-living pressures are influencing consumers, particularly for sales of non-essential goods. It was a poor month for clothing stores as the warm autumnal conditions reduced sales of colder weather gear. However, September’s unseasonable warmth did help drive up food sales a little, and fuel sales rebounded from last month’s fall.”

Small retailers were not surprised by the data. According to Natalie Ormond, owner at Leeds-based sustainable lifestyle store Smallkind: “September was the quietest month this year for us, and we're currently overshadowed by very slow sales and worries about the rest of 2023."

Chloe Moss, co-owner at Rotherham-based The Blind Badger Cocktail Company, experienced much the same: “September and October to date have been very quiet. Our Christmas shop opens on 1st November and we are hoping that sales pick up as we move into the festive period. If sales don't pick up, we probably won't make it into 2024. All of our sales are online, and our recommended daily advertising spend has increased by 800% in 2023, but we just aren't making enough sales to be able to afford this. We're in a Catch-22 situation as we can't generate sales without advertising but we need sales to be able to afford to advertise. It's a very sad time for us.”

Another online retailer, Michelle Cunningham, Co-founder at Tarelle Accessories, also had a tough September: “In September, our sales were down on last year by 43% and, so far, October is looking similar with sales currently 42% down on last year. I am an online business and the average order value is down by 30% on last year and I have noticed customers are not purchasing as much. Lower priced products are selling much better amid the ongoing cost of living crisis.”

While Shirley Leader, owner of Petersfield-based woman's clothing boutique Velvet & Rose, had a good September, she says October has been poor to date as cautious consumers take more time to make purchases: “September trading was good for us however we are very worried about October. We are tracking behind last year and feel that shoppers are taking much more time to make purchases. We are hoping to have a good quarter to make up for this downturn in sales.”

For Racheal Straughan, director of the Newcastle-upon-Tyne-based small retailer e-commerce marketplace, Mayfli, rising raw material costs and platform fees are making life even more difficult for online retailers: “September and October have been extremely challenging months for sellers. Many have experienced lower sales due to factors such as reduced consumer spending and rising raw material costs. Additionally, the commission fees imposed by platform giants have added to the challenges. There is a sense that the upcoming Christmas season may not bring substantial improvements, and some businesses are contemplating the possibility of closing next year if the situation doesn't improve. Overall, for many sellers, 2023 has been even more challenging than the COVID-19 years.”

One retailer was doing well, however: Jo Spolton, CEO of second-hand shopping platform aggregator, Rumage, commented: "Amid the cost of living and mortgage crisis, we are seeing increasing numbers of people coming to Rumage to find bargains. As prices continue to rise in response to supply chain increases, the attraction of buying secondhand or refurbished is growing. Conversions in the last two months have increased by 23%. People are planning for Christmas already to help spread the load, with technology items seeing an uptick this September in comparison to last year. We are expecting the fourth quarter to be good for the secondhand marketplace, especially in the gaming and big toy sectors. Bikes and scooters are always popular gifts and these high-ticket items are where substantial savings can be made by not buying brand new. We are fortunate to be counter-cyclical to economic downturns."

John Lamerton, small business author at Big Ideas... for Small Businesses, summed up the plight of many retailers: "It's so quiet in retail right now that the only footfall passing through many stores is the shoplifters. Paying customers are tightening their belt" ahead of a potentially tough winter of high fuel bills and even higher mortgage payments kicking in. It's looking like a cold, cold winter for many small retailers."

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