The wet weather, caution about spending amid high interest rates, and the early timing of Easter contributed to a dismal start to Spring for retailers in the UK.
Data from BRC – KPMG Retail Sales Monitor shows total sales fell at an annual rate of 4% in April, following 3.5% growth in March. Correcting for the distortion created by the early Easter, the average growth for March and April combined was just 0.2%.
Food sales increased 4.4% over the three months to April, but this was well below the 12-month average growth of 6.7% after a decline last month.
Non-food sales slipped 2.8% over the three months. This is steeper than the 12-month average decline of 1.5% and follows another month of weaker sales.
The disappointing data raises concerns over the UK’s recovery from recession as inflation falls. Analysts had expected the economy to rebound this year as wages rise faster than prices.
Helen Dickinson, Chief Executive of the British Retail Consortium, said: “Dismal weather and disappointing sales led to a depressing start to spring for retailers, even accounting for the change in timing of Easter.”
She noted that the wet April dampened demand for clothing and footwear, as well as DIY and garden items.
Dickinson added that retailers were hoping for “brighter sales” over the summer as social events increase, while “consumer confidence could improve with a potential cut in interest rates”.
Commenting on the food & drink sector, Sarah Bradbury, CEO at IGD, noted that the grocery market was always going to face a tough set of annual comparisons in April due to the early Easter, with sales and volumes both turning negative. “But there is hope – with inflation continuing to exit the market, increased promotional activity among retailers, and two upcoming bank holidays in which sales and volumes will surely improve,” she said.
Separate data published today by Barclays shows that consumer card spending in the UK grew by an annual rate of 1.6% in April – down from 1.9% in both March and February.
A slowdown in price inflation and cutbacks on food and drink led to a decline for restaurants (-13.1%) and the smallest uplift (1.0%) in supermarket spending since June 2022 (-0.8%). A survey carried out by Barclays found that a record 73% of people are actively looking for ways to reduce the cost of their weekly supermarket shop – the highest percentage since it started tracking in January 2023.
While the cold and wet weather dampened retail sales, Easter and summer holiday bookings boosted the pubs, entertainment and international travel sectors.
Karen Johnson, head of retail at Barclays, said: “Retailers were hopeful that discretionary spending would bounce back by mid-year, buoyed by falling inflation and the prospect of better weather.”
However, she added: “Many retailers have adjusted their expectations, anticipating no real recovery until the autumn.”
NAM Implications:
- The basic issue is diminished demand…
- …with hopes for improvement mid-year.
- Meanwhile, pragmatists know that in these circumstances…
- …any growth comes at the expense of rivals.
- Therefore focus on optimising relative competitive appeal (with fingers crossed).
