The British Retail Consortium (BRC) has warned that the soaring cost of living risks dragging down high street sales in 2022 after a relativity good Christmas trading period for the sector.
The BRC-KPMG retail sales monitor shows total retail sales rose by 2.1% year-on-year during December and were up by 4.6% compared with 2019, before the pandemic struck.
Sales of clothing and jewellery continued to dominate Christmas gift buying, while spending on food and drink was solid despite concern over the impact of Omicron. “In the face of rising case numbers and supply chain issues, people in retail pulled out all the stops to ensure everyone got what they wanted this Christmas,” said Helen Dickinson, Chief Executive of the BRC.
For the year as a whole, total sales grew by 9.9% compared with 2020, and by 6.6% compared with 2019 as the economy bounced back from the lengthy lockdowns at the start of the crisis.
However, the BRC noted that there were now significant headwinds for the industry in 2022 from high inflation, rising energy bills, and planned tax increases. The soaring living costs will erode households’ spending power and potentially lead to less demand for non-essential products.
Dickinson said retailers will require continued “agility and resilience if they are to battle the storm ahead, while also tackling issues from labour shortages to rising transport and logistics costs.”
Paul Martin, UK Head of Retail at KPMG, added: “Retailers have worked hard to manage factors in their control throughout the pandemic to adapt to the changing environment, but there are many macro factors outside of their control that could impact them this year. With many retailers cautiously optimistic for 2022, focussing on continuously re-engineering their business models, ensuring they operate resilient supply chains and have a tight grip on their costs will be the top priorities.”
NAM Implications:
- ‘high inflation, rising energy bills, and planned tax increases’…
- You don’t say.
- Whilst most retailers are expected to raise prices in 2022…
- …if the discounters decide to take a profit hit in the UK…
