Cost of living crunch looms as retail sales continue to fall
The UK’s cost of living crisis is increasingly showing signs in consumer spending habits, with retail sales volumes continuing their descent, according to the latest figures.
Sale volumes shrank by 1.4 per cent in March 2022, following a fall of 0.5 per cent dip in February. However, sales volumes were 2.2 per cent above their pre-pandemic levels.
Online retail sales have plunged to their lowest levels since February 2020, continuing its spiral since it peaked in February last year, as Brits look to save and brace themselves for inflationary headwinds.
Inflation would retailers’ top concern be for the rest of the year, as they battle to keep prices attractive while also offset their own costs, Aled Patchett, head of retail and consumer goods at Lloyds Bank, said.
He added: “Staying competitive as input costs rise and consumers face a squeeze on incomes will be critical to the health of businesses, though it won’t be easy to maintain. The war in Ukraine and new Covid-19 restrictions in China will also continue to affect supply lines and push up costs.
“This month’s rise in the minimum wage – though welcomed by workers – will also be felt by businesses. High streets and city centres are still struggling with low footfall and fewer people in the office. Retailers must balance their recruitment needs in quieter times with ensuring they have enough staff to capitalise when demand is high.”
Deloitte’s own research has found that consumers are holding off on large purchases amid rising costs.
Oliver Vernon-Harcourt, head of retail at Deloitte, said: “Our data indicates consumers are spending less on large-ticket items, such as furniture and major household appliances as well as some other discretionary categories such as clothing and footwear.”
Of those who are spending less, some 54 per cent suggested they were doing so to save money, Deloitte found. What’s more, some 35 per cent said they were choosing cheaper brands or stores and 25 per cent were taking advantage of sales or discounts.