Record Heatwave and Digital Spending Surge Drive British Retail Growth in June

Online sales reached their highest level in five years last month as unprecedented hot weather triggered a surge in demand for air conditioning, outdoor gear, and seasonal clothing.

The Office for National Statistics (ONS) reported that the volume of retail sales in Great Britain increased by 1% month on month in June, with the heatwave and a World Cup shopping rush defying analyst predictions of a 0.3% decline.

Year-on-year sales climbed 4.2% in June, significantly exceeding the consensus expectation of 2.3%.

“Internet retailers performed exceptionally well, with businesses attributing the gains to promotional offers and the warm weather, which drove strong demand for outdoor products, air conditioning, and clothing,” said Hannah Finselbach, a senior statistician at the ONS. “The strong performance of online retailers pushed the proportion of online sales to its highest point since spring 2021, when coronavirus restrictions were lifting.”

Following a revised 0.7% monthly drop in sales in April, two months of hot weather supported 0.6% overall growth in retail sales for the quarter ending June compared with the first three months of the year.

Non-store retailing, dominated by online platforms, experienced another robust month, with sales jumping 4.4% in June, though this was lower than the 6.1% growth recorded the previous month and 3.8% quarter on quarter.

Textile clothing and footwear stores also posted strong results, with sales rising 1.9% compared with May. Clothing stores saw a 1.9% month-on-month increase, the largest since September of the previous year.

Sales at other non-food stores, which include retailers outside of clothing, household goods, and department stores, rose 1.8% month on month, bolstered by computer and telecoms retailers.

However, department stores reported a 1.7% month-on-month decline after enjoying a 2.5% rise the previous month as consumers flocked to buy items such as fans and paddling pools during the hot weather.

Household goods stores also saw a decrease in sales, down 0.6% month on month.

“Retailers scored an early summer win in June, with retail sales exceeding expectations as warm weather, promotions, and World Cup excitement unleashed consumer spending,” said Samuel Edwards, the head of client portfolio management at the financial services firm Ebury.

While a “Burnham bounce” and World Cup optimism contributed to the largest jump in consumer confidence in nearly three years this month, Edwards warned that retailers face potential headwinds.

He cited factors including the increase in the energy price cap, persistently high interest rates, and the inflationary risk posed by renewed tensions in the Middle East as potential threats to consumer confidence.

“Warm weather did a lot of the work for retailers in June,” said Melissa Minkow, the global director of retail strategy at CI&T. “July’s figures will be an interesting watch, as we see the impact of Burnham’s cost of living policies take effect. Consumers tend to either pull back if they expect new policies to limit their funds or spend more if they believe those policies will be beneficial for their wallets.”

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