Rajeev Shaunak, Head of Consumer, comments on today's ONS retail sales data.
Following a promising start to the year for the retail sector, retail sales fell by 2.7% in May marking a slowdown in the sector. Despite wage growth remaining high, inflation was recorded at 3.4% in May and the cost of some basics is soaring — in May, chocolate prices rose at their fastest rate on record — shrinking consumers’ spending ability and having an adverse effect on retail sales. While Q1 saw solid growth, momentum is slowing due to persistent inflationary price pressures, international trade disruptions, and cautious consumer sentiment.
This is all a worry for retailers. To add to these issues in demand, increased employer National Insurance contributions, high energy bills, and a cut in business rates relief are all increasing businesses costs — there is a fear that the announcement by Poundland that it will cut 100-150 stores in the coming years could be a sign of things to come. Data compiled by the British Retail Consortium reported earlier this year that over 350,000 retail jobs have been lost in the last decade.
In response, retailers are streamlining operations, embracing AI-driven tools, and focusing on value-for-money ranges. As we ask ourselves what the future may look like for the High Street, it is clear that the long-term prospects for the retail sector will rely heavily on innovation, efficiency, and targeted investment expenditure.
