The UK high street has recorded its biggest drop in sales since the height of the recession.
BDO’s monthly High Street Sales Tracker (HSST) recorded a 6.1% fall in overall year-on-year sales in April – the worst overall figures since February 2009. The fashion sector also hit a low not seen since February 2009 – when the world was in the grip of the global economic crisis – with a like-for-like sales drop of -9.2% on last year and by – 9.7% in February 2009.
Sales of lifestyle goods were flat (-0.2%) and non-store sales grew by just 16.4%. Even a rally in the homeware sector (up 17.8%) couldn’t stop the overall figure sliding dangerously close to a double-digit drop.
Sophie Michael, Head of Retail and Wholesale at BDO LLP, said April’s unpredictable weather had taken away shoppers’ need for new spring/summer lines and with it, their reason to buy. With consumer confidence particularly weak driven by global events and uncertainty around the ‘Brexit’ referendum, consumers kept a tighter than usual grip on their wallets in April. But with temperatures set to rise this weekend, she urged retailers not to panic discount despite the sudden drop in sales.
“With sluggish consumer spending and the cold recent months, retailers will undoubtedly be feeling that everything is against them,” she said. “Consumer confidence will not be helped by the recent High Street corporate failures, and with figures like these, there will be a temptation to try and get shoppers spending through wide discounting. Retailers however need to be confident in their product offer, hold their nerve as the weather warms up, and be selective and strategic about promotions. Operating margins have already been squeezed this year through additional costs such as the National Living Wage and the adverse impact of a weak pound, and heavy discounting will only erode margin further.”