EY’s Silvia Rindone has given her comments on the ONS sales figures on what was a challenging March for retail but another sign of revival for the food and travel industries.
Silvia Rindone, EY UK&I Retail Lead, comments:
“March was another challenging month for retail, with consumer confidence staying low. Non-food sales went up, signalling that consumers are treating themselves by going out more and starting to travel again.
“However, we expect discretionary spending to come under pressure given the combination of increased energy bills, the National Insurance rise and the other inflationary pressures that face consumers. And despite the warm spell at the end of the month, which usually encourages people to get out and about, consumers are still carefully watching their spending.
“Looking ahead, we expect sales to have stabilised a little in April as the weather improved, particularly over the Easter bank holiday weekend. EY’s latest Future Consumer Index found that two-thirds of UK consumers are worried about their finances, and many will be looking to make smart choices about their spending, focusing on retailers that offer the best value for money.
“Retailers will need to ensure they address these concerns and be very clear about the ‘value for money’ proposition they offer to consumers – trying to be all things to all people is a risk.
“Continuing supply and cost challenges, including rising freight costs and stock delays are also putting direct and indirect pressure on retailers’ margins, with the late arrival of seasonal stock forcing heavy discounting and the increasing expense and difficulty of employing staff leading to warehouse delays.
“It’s vital that retailers focus on operational resilience and optimising working capital to weather the challenges ahead for the UK retail sector.
“The ONS data also showed that online sales have decreased again, yet levels are still consistently higher than pre-pandemic. There is no doubt that digital transformation is here to stay, but consumers still want that physical retail experience as well. Retailers therefore need to work to understand the dynamics between online and offline channels and getting the proposition right for consumers.”