Online spending boosted retail sales in the UK over the past month, while department stores rose for the first time this year as consumers shook off Brexit fears.

According to the National Statistics Office, the volume of goods purchased rose by 0.2% in July, supported by the annual Amazon Prime Day. The numbers follow a 1% increase in June, the disorderly urban economists who had expected a decline of 0.2%.

In the three months to July, retail sales increased 0.5% compared to the previous three months, after 0.7% in the previous three months.

What is the problem?

Physical retail was hit by a combination of changing habits, unusually warm weather, rising costs, and major economic problems. In 2018 Toys R Us, Maplin and Poundworld disappeared.

In terms of habits, shoppers switch to online buying. Companies like Amazon have an unfair advantage because they have a lower business rate, which lowers costs and allows online merchants to advertise low-cost buyers. Corporate taxes are based on the value of commercial real estate and are imposed on traditional retailers with retail outlets.

At the same time, there is a shift away from buying 'stuff' as more people live and rent in smaller homes rather than buying. This pressure has arisen when increasing labor and product costs, partly caused by Brexit, have coincided with economic and political uncertainty that has dampened consumer confidence.

What help do retailers need?

Retailers with a strong presence on the street want the government to change business rates. They also want more political certainty, as the potential for a no-deal Brexit means that some not only add to the extra cost of stocking goods, but are also unsure what the tariffs will be after October 2019. Retailers also want more investment in city centers to adapt to these changing trends, as well as cutting down on high parking fees.

What is the government doing?

In the budget for October 2018, the government announced some easing of business rates for independent shopkeepers. It has also set up a GBP 675 million "Future High Street" fund from which local authorities can pay up to GBP 25 million for redevelopment projects such as refurbishing historic buildings and improving transport links. The Fund also pays for the establishment of a working group providing expertise and practical support to local areas.

What is the outlook for 2019?

Some retailers could go down. Weakened by a difficult Christmas business, which is responsible for the overall annual profits of many retailers and is expected to continue to fluctuate in Brexit, retailers are facing a difficult year in 2019. A further rise in the national minimum wage in April and the depreciation of the pound against the euro Even the dollar used to buy goods in the Far East has resulted in costs and profits.

Rhys Murphy, the retailer of ONS retail store, said he had grown only marginally in the last three months. "Although there was still a decline in the quarter, July saw sales rise for the first time," she said. "The strong growth in online sales during the month was driven by promotions."

Non-retail retail, such as Internet shopping and mail order, grew 6.9% last month, the largest increase since May 2016. Amazon held its summer sale on July 15, and other retailers also offered price cuts.

The main street is shaken by a long-term shift in shopping habits as consumers increasingly shop online instead of visiting local shops. One bright spot was the highly competitive department store sector, where sales rose 1.6% in July, ending the six-month decline.

Elsewhere, the picture was less rosy. Food sales remained unchanged, apparel and footwear businesses declined 0.2%, and homewares sellers declined 5.4% due to the weaker housing market.





Retail sales



Retail sale Photo: ONS

Samuel Tombs, UK chief economist at Pantheon Macroeconomics, said the numbers showed consumers were not worried until the Brexit deadline.

"Admittedly, Amazon's Prime Day, which the retailer has been running every July since 2015, was most likely responsible for the huge 6.9% increase in non-business revenue compared to the previous month, which contributed 0.7 percentage points to growth overall Sales, "he said.

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"Sales volumes are expected to decline in August as some buyers have probably preferred their planned purchases to take advantage of Amazon's temporary discounts. Nevertheless, we believe that consumers can rest assured that they are stabilizing the ship. "

Others said consumer spending was also buoyed by the heatwave in July and were skeptical that consumers would continue to spend so much as the Brexit deadline on 31 October was approaching.

Gabriella Dickens, an economics assistant at Capital Economics, predicted that household spending would last as long as a Brexit could be avoided without an agreement. "Future prospects depend on what happens to Brexit. If there is no Brexit without agreements, consumer spending growth is likely to decline, "she said.