According to the ONS (Office for National Statistics), retail sales volumes were much stronger than expected in May, following a wet April, in news which will be welcomed by the sector’s long-suffering constituents.

Volumes rose by 2.9%, rebounding from the 1.8% fall witnessed in a washout April, with non-food store sales volumes up 3.5% and food sales fattening up by 1.2%. Not only were in-store sales better, but online sales rose across all main sectors too, suggesting the tide may finally turning for retailers.

Clothing and footwear sales were up 5.4% in an auspicious sign for sector heavyweights ranging from Next (NXT) and Marks & Spencer (MKS) to Associated British Foods (ABF), the owner of discount fashion seller Primark.

Meanwhile, GfK’s long-running Consumer Confidence Index increased for the third month running in June driven by optimism about the UK economy over the coming 12 months.

Consumers appear ready to spend on discretionary items such as clothing and furniture again since inflation has fallen back more quickly than pay growth in a boost to households’ real incomes.

Also positive for consumer sentiment is the drop in grocery price inflation, which fell for the sixteenth consecutive month to 2.1% over the four weeks to 9 June according to Kantar. With interest rates expected to be cut later this summer, the retail sector could soon receive a further injection of optimism.

The summer of sport has also kicked off and warmer weather is sweeping in, which should be good news for trainers-to-athletic apparel purveyor Sports Direct, part of the Mike Ashley-controlled retail conglomerate Frasers (FRAS). Shares in the FTSE 100 group gained ground on news (24 June) of a ‘multi-year’ partnership with e-commerce company THG (THG), a payments and logistics tie-up that includes the integration of Frasers Plus, the FTSE 100 retailer’s credit and loyalty platform, into THG’s Ingenuity platform.

As part of the strategic tie-up, THG has agreed to sell its luxury goods websites to Frasers and will support the retail giant with courier management services and re-platforming its Australian fulfilment and logistics operations.

‘This could be strategically important for Mike Ashley’s empire,’ explained Dan Coatsworth, investment analyst at AJ Bell. ‘Frasers has already shown it is good at selling products to consumers, now it wants to be a bigger player in the payments game. Having THG as a partner gives it a shop window to show off its skills and potentially encourage more shopkeepers to sign up.’

DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Ian Conway) own shares in AJ Bell.

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