Two recent reports examining consumer spending and retail sales in September have shed light on the fashion industry’s struggles, while beauty products continue to thrive.

These reports provide further evidence of the adverse effects of unseasonably warm autumn weather on fashion sales, resulting in a noticeable decline in share prices for prominent clothing retailers.

Firstly, the monthly consumer spending report from Barclays indicates a 4.2% year-on-year spending growth in September. While this surpasses the 2.8% growth observed in August, it falls short of the 6.3% inflation rate. Late-summer sunshine did boost in-store visits, contributing to overall spending. However, consumers are displaying caution, driven by concerns about «shrinkflation,» skepticism regarding loyalty program offers, and the prevalence of «surge pricing» during peak demand periods.

Given these factors, it’s unsurprising that clothing store sales for September were lackluster, with a 0.2% year-on-year decrease following a 0.7% drop in August. In contrast, discount stores fared better with a 1.5% increase following a lackluster August (-0.2%). Meanwhile, pharmacy, health & beauty stores experienced a remarkable 6.9% boost in September, the highest since January, possibly due to the «lipstick effect,» where consumers prioritize small luxuries during economic uncertainty.

Both the fashion and beauty sectors may have benefited from positive trends in bars, pubs & clubs (+6.1% compared to 2.8% the previous month) and continued double-digit growth in the travel sector (+13.2%). However, 44% of Britons are planning to cut back on discretionary spending in the coming months to save for the festive season. Additionally, 40% anticipate higher expenses during this Christmas period compared to last year, prompting 20% to commence their festive shopping early.

Another monthly report from the British Retail Consortium/KPMG focused exclusively on retail sales. It reported a 2.7% increase in sales, although still below the inflation rate, indicating a decline in sales volumes. Food sales saw a robust 7.4% increase in the three months leading up to September, but non-food sales declined by 1.2%. While non-food sales in physical stores showed a modest 0.3% increase, online sales dropped by 3.6%, all figures falling short of the 12-month averages.

Helen Dickinson, Chief Executive of BRC, highlighted that big-ticket items performed poorly, as consumers tightened their purse strings due to rising housing, rental, and fuel costs. Additionally, the «Indian summer» weather delayed the sale of autumnal clothing, knitwear, and coats.

Paul Martin, UK Head of Retail at KPMG, emphasized the strength of the beauty industry but noted that several categories, including clothing, experienced negative growth in September due to the unseasonably warm weather, discouraging consumers from shopping for winter wardrobe essentials.

In summary, fashion retailers continue to grapple with challenges, primarily attributed to an unusually warm autumn in the UK. However, a return to more typical weather patterns is expected shortly. This unseasonable warmth has led to significant stock price fluctuations among fashion retailers, including M&S, Next, Frasers Group, JD Sports, Dr. Martens, and Primark’s owner ABF, with some experiencing declines of up to 4%, driven by concerns about seasonally weak sales.

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