Retail sales slowed in March as higher prices continues to ‘shake consumer confidence’.
According to the latest BRC Retail Sales Index covering the five weeks 27 February – 2 April 2022, total sales increased by 3.1% in March, against an increase of 13.9% in March 2021. This is worse than the 3-month average growth of 6.9% and the 12-month average growth of 10.3%.
On a three-year basis, total retail sales grew 5.4% during March compared with the same month in 2019.
UK retail sales decreased 0.4% on a Like-for-like basis from March 2021, when they had increased 20.3%. This was worse than the 3-month average growth of 3.2% and the 12-month average growth of 6.5%.
Over the three-months to March, Non-Food retail sales increased by 14.9% on a Total basis and by 8.6% on a Like-for-like basis. In-Store sales of Non-Food items grew 92.9% on a Total basis and 74.9% on a Like-for-like basis.
Helen Dickinson OBE, Chief Executive British Retail Consortium, said: “As consumer confidence continued to sink, March saw sales slow, and while spend remained above last year this likely reflects higher prices. Online sales also decreased compared to last year but remain well above 2019 levels due to investment by retailers in their digital offer.
“The rising cost-of-living and the ongoing war in Ukraine has shaken consumer confidence, with expectations of people’s personal finances over the next 12 months reaching depths not seen since the 2008 financial crisis. Furthermore, households are yet to feel the full impact of the recent rise in energy prices and national insurance changes. There is also potential for further supply chain disruption, with China putting key manufacturing and port cities into lockdown. Ultimately, consumers face an enormous challenge this year, and this is likely to be reflected in retail spend in the future.”
Don Williams, Retail Partner KPMG, said: “Growth on the high street continued last month with total sales up 3.1% compared to March 2021, driven by a strong performance across most non-food categories.
“Online sales fell across all categories compared to March 2021, but penetration rates remain high confirming the “locked in step up” in online purchasing. This continues to force retailers to focus on finding the most effective mix between physical and online retailing.
“Sales growth in March rose at the slowest rate so far this year, suggesting clouds on the horizon as household budgets come under pressure from rising costs, an increasing tax burden and competition from holidays. There is concern on what this could mean for consumer confidence and the impact on discretionary spend.
“Additionally, retailers are facing their own battle with rising costs and inflation, and are walking a tightrope between absorbing rising costs themselves or passing these on to consumers, when competition for share of a shrinking wallet is increasingly fierce. The best retailers will continue to balance attention on areas that can yield cost and efficiency gains with a clear understanding of their customer and what they want to buy and how. The primary concern now is whether consumers will choose to reduce their physical and virtual shopping to counteract rising household bills and reduced household income.”