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What has autumn got in store for UK retailers?

What has autumn got in store for UK retailers?

These are tense times for the British economy, and the nation’s shopkeepers.  The retail sector is especially sensitive to everything from consumer confidence to the strength of the pound and the rate of inflation to interest rate movements so retailers are experiencing a topsy turvey ride at the moment.  Since we specialise in designing and fabricating bespoke metal display solutions for shopfitters, retail designers and store owners we obviously empathise with them, and like to keep an eye on what is happening in their world.  With this in mind we closely monitor the latest UK retail sales figures as well as the economic trends that are likely to impact them in the coming months.  In this article we round up some recent facts, figures and insights that our clients might find interesting.

Some vital statistics are on the up

Retail sales have been struggling with some serious headwinds, and not a little turbulence, for many months now.  They’ve had to contend with rising inflation, sluggish wage growth and a shrinking pool of discretionary consumer spend, to name but three of the current challenging factors.

Despite this, the latest figures from the British Retail Consortium-KPMG Retail Sales Monitor for August show that resourceful stores have successfully defied these downward pressures.  The picture is admittedly mixed, and somewhat confused, but there are definitely some bright spots.

The BRC-KPMG report shows that in August total sales rose 2.4 per cent, compared to a 0.3 per cent decline in the same period last year (which had been the poorest performance of 2016).  This is the strongest sales surge since Easter, above the three-month and 12-month averages of 1.9 per cent and 1.6 per cent respectively.

A big part of that success is thanks to canny retailers making the most of back-to-school and autumn fashion sales.  Like-for-like fashion sales edged up by 1.3 per cent from the same month last year – helped by the fact that in 2016 they dropped 0.9 as retailers struggled with the news of the Brexit vote.

Mixed messages

However, in May, June and July this year in-store sales declined 1.4 per cent on a total basis and 1.9 per cent on a like-for-like basis.  Over that same three-month period food sales held up nicely, edging back by just 0.2 percentage points to 3.2 per cent, a level which is still comfortably above the annual average of 2.7 per cent.  Non-food retail sales in the three-month period to August increased 0.6 per cent on a like-for-like basis and 0.9 per cent on a total basis, also above a 12-month total average growth of 0.6 per cent.

On the other hand online sales of non-food products put in a particularly strong showing – they grew 11 per cent in August, above both the three-month and 12-month averages of 9.8 per cent and 8.8 per cent respectively.

The bigger picture

Stepping back and looking at these numbers in the wider context you have to take your hat off to retailers – the conditions are less than ideal.

In July the cost of living remained stable at 2.6 per cent, according to the Office of National Statistics (ONS) Consumer Price Index (CPI), with a drop in fuel prices offsetting the rising cost of food, clothing and household goods.  In August, however, the rate of inflation climbed to 2.9 per cent, its joint highest level in more than five years.  This was partly due to the weakness of the pound following the referendum pushing up the cost of imports such as clothing and footwear – they climbed 4.6% year-on-year, their highest level since records began. The rebound in global oil prices was also a big factor – Petrol pushed the overall cost of living higher, increasing 1.8p a litre to 115.7p during the month, while diesel gained 2p to 117.6p.

By contrast, wage growth remains relatively slow.  The most recent wages data showed average weekly earnings rising at an annual pace of 2.1 per cent.  Ian Stewart, chief economist at Deloitte, said: “It is pretty remarkable that, with inflation near 3% and unemployment at the lowest level in over 40 years, we are not seeing much wage inflation.”  While this is a puzzle the effect is not in doubt – wages are being squeezed and spending is under pressure.  The fact that sales are holding up so well under these circumstances is explained by two factors – consumers continue to save less and borrow more, a situation that is not sustainable beyond the short term.

There’s a lot of business to go for.

Whatever turn the economy takes (and it’s anybody’s guess where we are headed) one thing is certain – people are still going to shop!  Those retailers that remain positive, use their imagination when it comes to promotions and continue to look for opportunities even if the going gets heavy, will do well.

Studies by Point of Purchase Association International suggest that over 80 percent of buying decisions are made in-store – so it’s essential that you create an environment that’s inviting, makes it easy for shoppers to find what they want and puts them in the mood to purchase.  So at times like these bespoke metal shop fittings and well-designed retail displays are incredibly important.  By the same token you obviously need to keep a tight rein on your spending, so it’s essential that you get help from expert value engineering specialists – people who can create bespoke products that not only work effectively but which are economical to produce.

If you are keen to take this approach to increasing sales then we’d be happy to share our specialist retail design and fabricating experience with you; just give us a call.

 

Dymond Shop Fittings

Dymond Engineering and Metal Products Ltd
Combrew Lane
Barnstaple
Devon EX31 2ND

Tel: 01271 372662
Fax: 01271 322077
Email: info@dymondshopfittings.co.uk

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