Tough times ahead for retailers, warns BRC boss

Retailers are in for a tough time in the months ahead, the head of the British Retail Consortium (BRC) has warned.

Speaking this week, after the latest KPMG Retail Sales Monitor figures were published, BRC CEO Helen Dickinson, (pictured) said: “It is clear the post-pandemic spending bubble has burst, with retailers facing tougher trading conditions, falling consumer confidence, and soaring inflation.”

She added: “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 make significant investments in their own operations and supply chains to mitigate against future price rises for consumers.”

According to the latest figures, for the second month in a row, UK retail sales declined, highlighting that consumers are becoming more sensitive to the cost of living.

Commenting on the statistics, Paul Martin, UK head of retail at KPMG, said: “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.”

He added: “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.”

In May this year, UK retail sales decreased 1.5 per cent on a like-for-like basis from May 2021, when they had grown by 18.5 per cent.

This was below the three-month average decline of 1.1 per cent and the 12-month average growth of 1.8 per cent.

Looking at the performance of specific areas of retail, Ms Dickinson said: “Sales volumes continued to see significant falls as the cost-of-living crunch squeezed consumer demand. Higher value items, such as furniture and electronics, took the biggest hit as shoppers reconsidered major purchases during this difficult time.

“Fashion and beauty did well as people prepared for holidays abroad and the summer’s social calendar; with red, white and blue outfits adorning shopping carts ahead of the Jubilee weekend. Meanwhile, online sales appear to have stabilised as a ‘new normal’, around nine percentage points above their pre-pandemic levels, but well down on the lockdown peaks.”