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    Retailers caught in rain as retail sales volume drops

    (Photo by PAUL ELLIS/AFP via Getty Images)

    Retail sales across Great Britain tumbled by 2.3 per cent in April, the Office for National Statistics reports, following a fall of 0.2 per cent in March (which has been revised down from 0.0 per cent).

    On an annual basis, retail sales volumes were 2.7 per cent lower than in April 2023 – and 3.8 per cent below their levels before the Covid-19 pandemic. Not an encouraging economic signal.

    Sales volumes fell across most sectors, with clothing retailers, sports equipment, games and toys stores, and furniture stores doing badly. The ONS blames the rain and storms which hit Britain in April, saying that “poor weather reduced footfall.” April was the UK’s sixth wettest April since 1836.

    Sales volumes at department, clothing, household and other non-food stores fell by 4.1 per cent in April, which is the joint largest fall since January 2021.

    Kris Hamer, director of insight at the British Retail Consortium, says struggling customers resisted buying “big ticket” items last month.

    That’s a reminder that households aren’t suddenly wealthier just because the annual inflation rate has fallen.

    Hamer explains, “Sales volumes saw significant decline in April, falling for the third time in five months as the gloomy, wet weather combined with the cost of living squeeze dampened spending. Cosmetics continued to sell well, and computer sales were boosted thanks to promotional activity and consumers upgrading their tech a few years after the pandemic surge in tech sales.

    “Meanwhile, clothing and footwear and furniture failed to deliver due to the poor weather and consumers thinking twice before buying high ticket items.”

    Jacqui Baker, head of retail at RSM UK and chair of ICAEW’s Retail Group, comments, “The tough start to the year dragged on for retailers in April, with homeware and clothing hit the hardest. The cold and wet weather put shoppers off from heading to the high street, leading to some consumers shopping online instead, with an uptick of 1.1 per cent.

    “Although workers will have benefitted from a National Insurance cut in April, as well as an increase in minimum wage for some, it’s likely we won’t start to see the benefits until May onwards. Plus, with inflation easing, interest rate cuts on the horizon and the sunshine making an appearance, things should start to look up soon as consumer confidence builds.

    “Some retailers have been able to weather the storm better than others. Marks and Spencer for example, showed strong growth in food, clothing and home sales in its latest results. Its success story shows it’s possible to turn things around, when going back to the basics and focusing on core values.

    “However, many retailers are struggling, and as election fever grips the nation consumer confidence could be hit in the short term. Whatever the outcome on 4 July, retailers need root-and-branch reform of business rates, plus a U-turn on tax-free shopping, to be high up on the next government’s to-do list to alleviate key headwinds impacting the industry now.”

    Thomas Pugh, economist at RSM UK, added, “The sharp drop in sales volumes in April is a disappointing start to Q2 for retailers, especially against a backdrop of rapidly falling inflation. Much of the blame seems to lie with the miserable weather last month. 

    “However, we expect retail sales volumes to continue to gradually improve from here for three key reasons. First, households’ real disposable incomes are set to rise rapidly from April as inflation falls back to 2 per cent, tax cuts kick in and the large minimum wage increase comes in. This will boost overall consumer spending and retail sales volumes. What’s more, consumer confidence should continue to rise, ensuring that households spend most of their new income. Consumer confidence rose to -17 in May, its highest level since 2021. Admittedly, the campaign for the general election may knock consumer confidence in June but we don’t expect this to be significant.

    “Second, inflation is especially weak within retail sales. The price of retail goods increased by just 1.7% in April annually, the slowest rise since early 2021. This means that continued strong nominal spending will increasingly show up in sales volumes.

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