Retail sales fell in March by the biggest margin since records began, according to new figures from the British Retail Consortium (BRC).
The BRC said that total sales during the month were down around 1.9 per cent when compared with the same month last year. This represented the worst performance since 1996, when the survey was started. Factors such as the late Easter impact these figures but its not really easy to say how much?
Like for like sales were 3.5 per cent lower than the previous year which is the worst like for like performance since 2005. So nothing to celebrate there for retailers.
Meanwhile online sales remained quite resilient. They were up by 7.5 per cent, which in other fields would be a rocking increase, but this is still lower than the 10.4 per cent increase registered in February. So in real terms its not good news.
The late Easter is partly to blame for the figures according to the BRC, but this alone is not enough to explain the poor performance of retail.
Instead, analysts have suggested that rising prices, the coalition’s VAT increase, and real-terms wage cuts for many workers are likely to be the cause. Basically knocking consumer confidence if not into the ground, at least into a wooded area.
Stephen Robertson, Director General, British Retail Consortium, said:
“This is the worst drop in total sales since we first collected these figures in 1995. Non-food retailers were particularly hard-hit. This is strong evidence of the pressure customers and traders are under. This year’s later Easter is a factor but this fall goes way beyond anything that can be explained by that alone.
“Uncomfortably high inflation and low wage growth have produced the first year-on-year fall in disposable incomes for thirty years. Mounting fuel and utility costs, falling house prices, higher VAT and the prospect of more tax rises and job losses left people unwilling to spend unless they really had to. These pressures aren’t going away and the arrival of higher National Insurance is likely to compound them in the immediate future.
“The next interest rate decision is a difficult balancing act for the Bank of England but, for now, supporting our weak economy must be the priority. Inflation is coming mainly from temporary and external price shocks - VAT, world commodity prices and the weak pound - not wage or consumer-driven increases. Increasing interest rates would do more harm than good.”
Helen Dickinson, Head of Retail, KPMG, said:
“The food sector suffered in the month due to Easter purchasing falling into March last year, thus impacting the overall results. However, beyond this the trend continues in a marked downward direction: non-food continues to struggle, with big-ticket and home-related sectors again being the hardest hit. We have seen an emergence of new, lower spending patterns since the middle of January, which are currently continuing to trend downwards. Many retailers will not be able to sustain this ongoing weakness in demand beyond the short term and are hoping for some good news around the extended bank holiday period and a feel-good factor driven by the royal wedding.”
where, I hear you ask, is the good news ? The short answer is that there isn’t any - apart from three bank holidays that may get shoppers back onto the high street, but even these three days aren’t magical days that can make up for the lack of confidence and disposable income, so while we have sunshine, daffodils and longer evenings, all of which are long overdue, we don’t sadly have any good news for retailers… yet !
