UK Retail Sales Growth Slows to 1.3% in July

"Consumer demand has struggled in the heat, leaving retailers facing a challenging start to the second half of the year."

Household budgets remain stretched. Consumer confidence is fragile. Retailers continue to grapple with rising operating costs, she said.

Dickinson called on the government to reduce the cost of doing business. She cited business rates and new packaging taxes as examples of regulatory burdens. Rising employment costs also weigh on margins, she said.

Sarah Bradbury, CEO at IDG, said a "welcome uplift in shopper confidence" was visible but challenges remain. "Pressures are building across the food supply chain as a result of the conflict in the Middle East and prolonged hot weather, increasing the likelihood of higher food costs and renewed pressure on household budgets as we move into the autumn," she said.

Richard Nolan, chief operating officer at Epos Now, said consumers are "thinking harder about every pound." Businesses need real-time data on stock, pricing and promotions to adapt quickly, he said. "The retailers that win in this environment won't necessarily be the biggest. They'll be the ones that can adapt fastest, using technology and data to stay close to their customers and turn cautious spending into long-term loyalty."