British retail sales fall in lead up to EU referendum, says BDO

British shoppers spent less in June in the build up to the European Union (EU) referendum, according an accounting firm on Friday.

A report by BDO revealed that like-for-like sales fell by 3.6% in June, the worst result for June in more than decade.

June marked the fifth negative month in a row. Since August last year lifestyle, fashion and homewares recorded negative monthly figures.

Homewares ended three positive months with a record low since October 2012 as sales were down 6%. BDO said it had a slightly better performance than either lifestyle or fashion as it only had a negative results for five of the last 12 months.

Lifestyle had a third negative monthly result in succession as sales fell by 0.2% in June. Father’s day only brought a slight 0.21% rise in sales. Lifestyle had posted negative results for eight of the last twelve months.

Fashion sales fell 4.9%, its second lowest figure this year so far. Clothing, footwear and accessories were all down in the last three weeks of June, as footwear saw the largest decline.

The UK’s sixth largest accountancy firm said low consumer spending was due to the poor weather and the EU referendum. Overall footfall declined across the board from 0.9% in the first week of June to -5.1% in the last week.

BDO’s results corroborated a recent survey by the Confederation of British Industry (CBI). The CBI reported retail sales slowed down ahead of the referendum, which it said was backed by a number of retailers who saw sales fall to 4% in June and 7% in May. It conducted the survey between the 26 May and 14 June.

The CBI also said that the there was slowdown in online sales in the year June, but expects online and store sales to increase in July.

A report by the Department for Work and Pensions said consumers had the money to spend as the average income before housing costs was at an historic high of £473 per week. But BDO said the challenge for retailers is to convince them to spend.

According to the verdict retail consumer confidence tracker in May, retail spending intentions were down 4% compared to 2015, but were up 1.6% on last month.

Sophie Michael, head of retail and wholesale at BDO said: “Many retailers may have hedged against the falling pound for the short term, but if sterling stays at these levels, the cost of importing goods and further erosion to margin may need to be passed onto the consumer. It is even more important now for retailers to focus on their product offering and service.”

“While reports suggest that average income has reached a historic high, the challenge for retailers is to convince consumers to spend their surplus income with them, amid the temptation of a post-Brexit spending analysis.”

Retail analyst and consultant Nick Bubb added: "The BDO high street sales tracker for week ending 3 July was not great, with overall store like for like sales down by 1%, but this weekly non-food sales survey of smaller chains is nearly always gloomy, partly because it excludes online sales, which were up by 21.8% in total."