Retail sales in the UK experienced a decline in September, making it the second-worst month for retailers this year, according to a survey released by the British Retail Consortium (BRC) and KPMG. The report highlighted that cash-strapped consumers opted to avoid big-ticket spending and delayed winter clothing purchases due to unseasonably warm weather. This led to a decrease of 4.1% in expenditures compared to the previous month of August, although there was a 2.7% increase in spending compared to the same period last year.
Helen Dickinson, CEO of the BRC, stated that the poor performance of big-ticket items such as furniture and electronics was due to consumers limiting their spending amidst rising housing, rental, and fuel costs. Additionally, the survey revealed that the warm weather also impacted sales of autumn clothing, knitwear, and coats.
September’s weak retail sales marked the second weakest month of the year, falling significantly below the inflation rate. This suggests a decline in the volume of goods sold. Concerns have been raised regarding year-end profits, as soaring interest rates continue to squeeze household incomes and unemployment rates rise in the UK.
The decline in sales comes just ahead of the highly crucial “golden quarter,” which is the run-up to Christmas when retailers typically experience a spike in sales. However, amidst the current economic climate, shop owners are anticipated to face fierce competition and resort to early and abundant promotions in a bid to attract customers and offset tight household budget constraints.
Paul Martin, UK head of retail at KPMG, emphasized that consumers will be driven by price and seek out good deals, making this year’s golden quarter one of the most important in recent years.
The UK is grappling with a cost of living crisis, causing a significant drop in consumption. Furthermore, concerns of a recession are mounting as successive interest rate hikes take a toll on the country’s economy. The Purchasing Managers Index, an indicator of overall economic health, showed a contraction in August and September, while unemployment rates have been rising for three consecutive months.
In conclusion, the survey results highlight the challenging environment that retailers in the UK are currently facing. The decline in sales, coupled with rising costs and economic uncertainties, pose significant obstacles to their profitability. As the holiday season approaches, retailers are expected to introduce aggressive promotional strategies to entice consumers to spend amid tight budgets. The outcome of the golden quarter will have significant implications for the retail industry’s performance and the overall economic health of the UK.