Britons cut spending amid cost of living squeeze: BRC-KPMG May data

Retail food sales in May dropped by 1.3 percent, shows latest data, suggesting that cost-of-living crunch is now squeezing consumer demand.

According to BRC-KPMG Retail Sales Monitor- May 2022 released today (7), over the three months to May, food sales decreased 1.3 percent on a Like-for-like basis and 0.7 percent on a Total basis. 

On a total basis, sales decreased by 1.1 percent in May, against an increase of 28.4 percent in May 2021. This is below the 3-month average growth of 0.7 percent and the 12-month average growth of 4.1 percent.

UK retail sales decreased 1.5 percent on a Like-for-like basis from May 2021, when they had increased 18.5 percent. This was below the 3-month average decline of 1.1 percent and the 12-month average growth of 1.8 percent, says the report.

Over the three-months to May, non-food retail sales decreased by 1.0 percent on a like-for-like basis and increased 2.0 percent on a total basis. 

Worst-hit items are higher value items, such as furniture and electronics as shoppers reconsidered major purchases during this difficult time, revealed Helen Dickinson OBE, Chief Executive- British Retail Consortium.

“It is clear the post-pandemic spending bubble has burst, with retailers facing tougher trading conditions, falling consumer confidence, and soaring inflation impacting consumers spending power. Supply chain issues including rising commodity and transport costs, a tight labour market and higher energy bills are forcing retailers to increase their prices, contributing to wider inflation.

“Profits may be squeezed further, as retailers continue to find efficiencies in their own operations and supply chains to reduce the impact of future price rises for consumers,” Dickinson said.

Paul Martin, UK Head of Retail at KPMG, said that rising cost of living is going to remain the main story for retailers for the immediate future.

“The rising cost of living is going to remain the main story for retailers for the immediate future, with consumer confidence a key factor to watch out for.  Retailers will be hoping that a post-Jubilee and summer feel-good factor begins to improve confidence amongst some shoppers – as presently overall confidence levels are lower than sales may suggest.

“Cost and efficiency will firmly be top of agenda for most operators, and understanding how they can protect their margins whilst remaining price competitive for consumers,” Martin said.

Susan Barratt, CEO- IGD, shoppers are finding it incredibly tough right now though the Chancellor’s announcement of a cost-of-living support package may have offered some respite.

“ Spending priorities are changing rapidly in reaction to continuous price rises, with shopper coping strategies differing by individual life circumstances.

“We anticipate the Jubilee may provide a welcome break and opportunity to celebrate with friends and family, with a third (30 percent) planning to celebrate over the Bank Holiday weekend. However, shoppers face a challenging few months ahead as they look to contend with the rising cost of living,” Baratt said.