Silvia Rindone, EY UK&I Retail Lead comments:
“The 0.9% decline in retail sales volumes in March was unsurprising as the sustained inflationary environment continues to leave consumers cautious about spending across food and non-food retail. Increasing food prices are forcing consumers to make choices to buy less as they pay more. The recent period of poor weather has also put many off from buying their spring-summer wardrobe and other non-discretionary items.
“However there may be a light at the end of the tunnel as the ‘three-month’ trajectory indicates that sales volumes rose in the three months to March 2023, the first quarterly rise since August 2021. As we enter spring, the Easter holidays and the various bank holiday weekends, should continue to drive food sales, however retailers must remain cautious with how sustainable this is as household disposable income continues to be squeezed.
“Data from EY’s Future Consumer Index shows an enhanced focus on value and utility – meaning cost isn’t always the defining factor when making a purchase. Retailers should take this into consideration when developing their value proposition. They will need to navigate a tight balance between rising costs and deciding how far they continue to pass on price increases without impacting the top line. Now more than ever having a clear strategy on the value proposition that delivers on what consumers want is critical. In an environment of slow volume growth, working capital and range/pricing decisions remain the most important considerations for retailers.”