Retail Sales Monitor
Sales Slump Further as Spending Squeeze Continues
Helen Dickinson OBE, Chief Executive, BRC:
Sales volumes continued to see significant falls as the cost-of-living crunch squeezed consumer demand. Higher value items, such as furniture and electronics, took the biggest hit as shoppers reconsidered major purchases during this difficult time. Fashion and beauty did well as people prepared for holidays abroad and the summer’s social calendar; with red, white and blue outfits adorning shopping carts ahead of the Jubilee weekend. Meanwhile, online sales appear to have stabilised as a ‘new normal’, around nine percentage points above their pre-pandemic levels, but well down on the lockdown peaks.
It is clear the post-pandemic spending bubble has burst, with retailers facing tougher trading conditions, falling consumer confidence, and soaring inflation. Supply chain issues including rising commodity and transport costs, a tight labour market and higher energy bills are forcing retailers to increase their prices, contributing to wider inflation. Profits may be squeezed further, as retailers make significant investments in their own operations and supply chains to mitigate against future price rises for consumers.
Paul Martin, UK Head of Retail, KPMG:
For the second month in a row UK retail sales declined, highlighting that consumers are becoming more sensitive to the cost of living.
Non-food purchases related to the home, such as furniture, home appliances and computing, suffered the biggest falls in spending in May. Online, although still significantly higher than before the pandemic, has now experienced a double-digit decline over the last three months.
There was better news though for clothing, footwear and accessories sales, with both in-store and online purchasing driven up by the approach of the summer season and the promise of outdoor events and travel firmly on many consumers’ radars.
The rising cost of living is going to remain the main story for retailers for the immediate future, with consumer confidence a key factor to watch out for. Retailers will be hoping that a post-Jubilee and summer feel-good factor begins to improve confidence amongst some shoppers – as presently overall confidence levels are lower than sales may suggest.
Cost and efficiency will firmly be top of agenda for most operators, and understanding how they can protect their margins whilst remaining price competitive for consumers.
Food & Drink sector performance, Susan Barratt, CEO, IGD:
Whilst the last four weeks show modest growth, we increasingly expect that value sales are being boosted by inflation this year and that underlying volume trends are weaker as shoppers economise to manage the cost-of-living challenges they face.
Shoppers are finding it incredibly tough right now, and although the Chancellor’s announcement of a cost-of-living support package may have offered some respite, our Shopper Confidence Index data for May shows that shopper confidence is still incredibly low. Spending priorities are changing rapidly in reaction to continuous price rises, with shopper coping strategies differing by individual life circumstances.
We anticipate the Jubilee may provide a welcome break and opportunity to celebrate with friends and family, with a third (30%) planning to celebrate over the Bank Holiday weekend. However, shoppers face a challenging few months ahead as they look to contend with the rising cost of living.
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