Retailers left disappointed after sales growth stalls
Retail sales growth stalled last month, disappointing retailers who were hoping for a spring rebound in their fortunes.
Despite special occasions such as Mother’s Day, Ramadan and an early Easter, spending remained flat as cost-conscious shoppers kept their money in their pockets.
Bad weather at the start of March is also thought to have dampened the urge to spend.
Although inflation is easing, sales volumes showed no growth after rising in February, the first time that they had not risen in monthly terms since December, the Office for National Statistics (ONS) said. Economists had mostly predicted that sales volumes would increase by 0.3 per cent during the month. Heather Bovill, of the ONS, said yesterday: “Retail sales registered no growth in March. Hardware stores, furniture shops, petrol stations and clothing stores all reported a rise in sales.
“However, these gains were offset by falling food sales and in department stores, where retailers say higher prices hit trading. Looking at the longer-term picture, across the latest three months retail sales increased after a poor Christmas.” Fuel sales grew at the fastest rate since May 2022 and non-food store sales were offset by falls in food stores and online and other nonstore retailers, the ONS said. However, total sales volumes – excluding petrol and diesel – were down 0.3 per cent on the month. “What is clear is that the first quarter of the year has been disappointing for many retailers,” said Lisa Hooker, an analyst at PwC. “Lower inflation and the first 2 per cent cut to national insurance, which was felt in January’s pay packets, has yet to translate into a sustained recovery in spending.” Matt Jeffers, of Accenture UK and Ireland, said: “After a flat February,
STERLING THIS WEEK
Growth in non-food store sales was offset by falls in groceries and online transactions in March
retailers will have been longing for the start of spring and the Easter holidays.
“Easter often encourages renewed spending, with promises of warmer weather to come amid seasonal promotions.
“This, combined with inflation falling to its lowest level in two and a half years, means that retailers will be slightly disappointed to not see a rebounding in sales.
“We saw falls in food and nonstore retailing which was offset by higher spending on fuel and nonfood items. Given the uncertain economic picture, consumers remain cautious with their spending.
“As we approach the summer, and after two relatively flat months, retailers need to boost their efforts to attract and retain customers. Since price is a primary concern for shoppers, brands must
The British Retail Consortium called for any future government to champion a “pro-growth policy”, addressing cost burdens on businesses, so retailers can unlock important investment highlight the value and quality of their products to stand out in the competitive market.”
Price rises are deterring consumption, according to Paul Donovan, of UBS. He said: “Retail sales in March were weaker than consensus expectations. Consumers still seem intent on punishing attempts at profit-led inflation – price increases are deterring consumption.
“The data do not directly capture the pivot to spending on having fun as services are not included, but stronger clothing sales hint at this trend.”
Kris Hamer, of the British Retail Consortium, said: “While consumer confidence remains weak, it is well above levels seen last year.”