UK retail sales growth stalled in the second half of July as cautious consumers pulled back on discretionary spending. Total like-for-like sales across fashion, lifestyle, and homeware rose 2.7 per cent compared with July 2025, according to BDO’s latest High Street Sales Tracker. The figure is only slightly above inflation, suggesting that the volume of goods sold increased marginally year on year. This marginal increase indicates that while nominal sales figures show an uptick, the actual number of physical items moving off shelves is minimal. It reflects a retail sector that is struggling to move beyond basic economic pressures, where consumer purchasing power is being eroded by external economic factors, leaving retailers with little room for error.
Strong in-store performance masks online slide
In-store sales climbed 3.8 per cent, marking the strongest performance since January last year. This figure was measured against growth of just 0.8 per cent in July of the previous year. Online trading followed a similar pattern. Like-for-like ecommerce sales fell into negative territory at the end of the month, with sales down 0.07 per cent in the final week. High street sales growth slowed sharply during the final week, dipping to just 0.09 per cent. The divergence between physical and digital channels becomes particularly evident when examining the seasonal breakdown, as the digital channel faced headwinds that culminated in negativity by the week’s end. The contrast between the strong start and the final week’s sharp deceleration highlights a loss of momentum that retailers failed to sustain throughout the period.
A month of two halves
BDO head of retail and wholesale Sophie Michael said July had been “a month of two halves,” with the positive momentum recorded during the opening fortnight disappearing by the end of the period. “We typically see some volatility in like-for-like sales across July, with the school holidays impacting retail sales over the summer,” Michael said. “Retailers may have been taken aback at just how steep the decline in sales has been over the past couple of weeks.” The general volatility usually associated with the summer months—often driven by school holidays and varying weather patterns—was exacerbated this year, breaking the standard seasonal rhythm that retailers rely upon for planning.
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The sudden slowdown suggests that the initial optimism for the summer season might have been premature. If the unusually warm weather earlier in the summer encouraged shoppers to refresh their wardrobes sooner than usual, retailers are now left holding unsold inventory just as the back-to-school rush typically begins. This timing coincidence may well create inventory bottlenecks that complicate the transition to the autumn trading period. The premature spending behavior creates a distinct supply chain and inventory challenge, as shoppers accelerated their purchase cycles and drained demand from the late-summer period when stock should ideally be turning over.
Michael suggested that uncertainty surrounding interest rates, energy costs, and the government’s forthcoming Budget continued to weigh on consumer confidence and non-essential spending. “With consumer spending remaining subdued and households continuing to prioritize essential purchases over discretionary items,” Michael stated, “retailers face a particularly challenging trading environment.” The macroeconomic backdrop plays a key role in this shift, as the convergence of rising interest rates, persistent energy costs, and the looming uncertainty of a government Budget creates a climate of hesitation among shoppers.
BDO warned that retailers would need to manage stock levels carefully and protect cash flow while adapting to changing customer demand ahead of the key festive trading period. Michael added that the coming months were likely to be decisive for the health of the UK retail sector following an inconsistent first half of the year. The strategy for the remainder of the year must be one of survival and adaptation, with the need to adapt to this new, cautious spending behavior being vital to handle the volatility that typically defines the holiday season.
