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Olympics, Not Brexit, to Blame for Slowdown in British Retail Sales in August

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A deeply divided Britain came together last month to watch Team GB take home a total of 64 medals at the Rio Olympics, but less footfall in stores hurt retailers’ sales.

According to the BRC-KPMG retail sales monitor for August, total sales declined 0.3%, versus a 0.1% increase the year before. Excluding Easter distortions, this was the weakest performance in nearly two years.

“A month of extraordinary achievement for Team GB certainly produced a feel-good effect and consumer confidence was up on July, but that generally didn’t translate into extra sales,” said Helen Dickinson, the British Retail Consortium’s (BRC) chief executive officer.

On a three-month basis, total retail sales were up 0.6% last month—the 12-month average is 1.2%—with non-food sales (including apparel and footwear) rising by only 0.4%, much slower than the one-year average of 1.9%. BRC attributed this slowdown to lower footfall due to the warmer weather.

“Sales of women’s fashions performed particularly poorly, despite widespread promotions,” said David McCorquodale, head of retail at KPMG. “The warmer weather made it almost too hot to shop and dissuaded shoppers from looking at the newly arrived autumn products.”

Indeed, overall shop prices fell 2 percent in August, from the 1.6% decrease in the month prior. Non-food deflation hit 2.5% last month from 2.2% in July. Even e-commerce suffered, with online sales of non-food products growing 6.2% compared to a year earlier—the slowest increase in more than three years.

“Women’s footwear experienced negative growth in the month with shoppers reluctant to consider new autumn collections in the summer heat. No doubt the category will improve as the weather cools in the coming months,” McCorquodale continued. “With the summer holidays now coming to an end, ‘back to school’ marks the next opportunity for online retailers to grab the attention of shoppers.”

Despite Britain’s vote in June to leave the European Union and all the economic uncertainty surrounding that decision, Dickinson advised against reading too much into August’s lackluster performance.

“As we’ve seen in the last couple of months, data portending the health of the economy paint a volatile picture. The fact is that so far little has directly changed for the U.K.’s consumers as a result of the referendum, so it’s the pre-existing market dynamics that are still driving sales,” she said. “The slowdown in real wage growth in the first half of 2016 and strong competition will continue to weigh on trend growth in total sales; whilst holiday timings, promotional and seasonal activity will contribute to fluctuations month on month.”

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