After the Christmas spending boost subsided, retailers were hit by the January blues as demand weakened due to the cost of living crisis.
Data from the BRC-KPMG retail sales monitor shows total sales rose by 4.2% in January compared with a year earlier, down from December’s growth rate of 6.9%. However, much of the rise is because of surging inflation pushing up the value of goods being sold, masking weaker sales volumes.
“Many retailers discounted heavily to entice consumer spend, and while there were bargains to be had in the January sales, retailers continue to be hit by lower margins and falling volumes. Own brand ranges remain popular across food and non-food products, and big ticket items are seeing customers trade down,” said Helen Dickinson, Chief Executive of the BRC.
“The coming months will continue to be challenging for retailers and their customers. Consumer confidence remains stubbornly low and looming rises in household bills and mortgages mean discretionary spending will remain weak.”
In the food sector, the data shows that total sales rose by 8.0% over the three months to January.
Susan Barratt, CEO at IGD, commented: “At first glance, food and drink sales in January look uncharacteristically strong, but in fact, the typical slow start to the year has been heavily disguised by a big dose of inflation. After a slightly more buoyant December, it’s clear that volumes fell in January as shoppers put the post-festive brakes on their spending.”
NAM Implications:
- i.e. volume-wise, the above stats indicate cashflow issues as 2023 progresses…
- …that for some suppliers and retailers will lead to merging, takeover or liquidation.
- Their trade partners had best prepare for these inevitabilities…
- …either by identifying opportunities arising from rivals leaving the market…
- …or Prices & Terms disparities being revealed through customers merging.
