Latest industry data suggests that retail sales volumes fell last month at a rate not seen since the depths of the pandemic as surging inflation eats away at household spending power.
Analysis by the British Retail Consortium (BRC) and KPMG found that the total value of sales were 1% lower in June than a year ago – a third consecutive monthly decline. Like-for-like sales fell 1.3%.
However, the figures are not adjusted for inflation, which the BRC said was running at 3.1% among its members – the highest since 2008.
The official consumer prices index measure is at a 40-year high of 9.1% – driven up mostly by rocketing energy and fuel costs.
The BRC noted a temporary lift in grocery spending during the Queen’s platinum jubilee celebrations over the Bank Holiday and fashion retailers benefitted from warmer weather. But it also highlighted a trend of shoppers trading down to cheaper brands of food and other goods. There was also a lack of demand for higher-value purchases, such as household appliances and furniture.
BRC Chief Executive Helen Dickinson said retailers were caught between rising costs in their supply chains and protecting their customers from price rises.
She added: “The government needs to get creative and find ways to help relieve some of this cost pressure – the upcoming consultation on transitional relief is a golden opportunity to ensure that retailers aren’t overpaying on their business rates bills.
“Government action on transitional relief would make a meaningful difference to retailers’ costs and ease pressure on prices for customers.”
Meanwhile, Paul Martin, UK Head of Retail at KPMG, commented: “As the cost living crisis continues to deepen, retailers face walking a fine line between protecting margins and further denting consumer confidence by passing on price rises whilst negotiating with their suppliers to share the cost increases.
“Cost and efficiency will dominate retailers’ agendas as they are forced to make some tough decisions on which products make it to the shelves in order to remain price competitive for consumers. With a long run of hot weather predicted and many consumers choosing to holiday at home this summer, retailers will be hoping that the feel-good factor begins to improve confidence amongst some shoppers – as presently overall confidence levels are lower than sales may suggest.”
NAM Implications:
- The underlying damage done to the economy, consumers, retailers and suppliers by the Lockdown over-reaction…
- …has yet to emerge in the pipeline.
- A compromise will be reached whereby all costs will be shared between consumer, retailer and supplier.
- It will be a reflection of Need, Demand and Power…
- And it was ever thus…
- We just have to get on with it!
