Fashion contributes to moderate UK retail growth ahead of golden quarter

The UK retail sector recorded a moderate but positive performance in September, with total like-for-like (LFL) sales across discretionary categories – including fashion, homewares, and lifestyle – growing by +3.1%. This growth comes ahead of the critical 'Golden Quarter' trading period, offering a cautiously optimistic outlook despite a strong comparison base from September 2024.

High street stores were a significant driver of this growth, with in-store sales rising by an impressive +3.7% compared to the same month last year. This marks one of the highest figures this year and builds on a positive August, suggesting a renewed appetite for physical shopping experiences for categories like fashion. Consumers appear to be returning to brick-and-mortar locations to browse and purchase apparel, perhaps driven by the seasonal change and the desire to try on items.

However, the picture for online retail was more subdued, with sales ticking up by just +3.0% against a very strong +11.6% base from September 2024. While still positive, this slower online growth, especially for fashion, indicates a rebalancing of consumer shopping habits between physical and digital channels.

Despite these positive sales figures, Sophie Michael, Head of Retail and Wholesale at BDO, notes a critical caveat: the rate of growth remains below inflation, meaning that sales volumes are actually down compared to last year. This "discretionary spend growth remains below inflation" impacts the fashion sector directly, as consumers may be buying fewer items even if the value of sales increases due to higher prices.

Looking ahead, the upcoming Chancellor’s Budget, just two days before Black Friday, presents significant uncertainty for fashion retailers. Michael warns that "consumers will be approaching their spending choices with caution," potentially tightening their belts on items like fashion in favor of essential and luxury food items as Christmas approaches. Retailers are advised to navigate this period strategically with promotions and careful pricing to avoid excess stock and protect margins in the new year.