Retail reacts to March 2023 ONS data: "Retailers must remain cautious"

Retailers saw sales fall in March as poor weather impacted Britons heading to the shops. The decline in overall sales was heavier than expected, with economists predicting a 0.5% decline for the month. 

The Office for National Statistics (ONS) said that retail sales volumes declined by 0.9% last month as clothes shops, department stores and garden centres all reported declines.

It comes after retailers reported a 1.1% increase in sales volumes in February, with the ONS marginally downgrading its original 1.2% growth figure.

Key experts across the fashion and retail industry reacted to the March 2023 data:

Darren Morgan, ONS Director of Economic Statistics:

“Retail fell sharply in March as poor weather impacted on sales across almost all sectors. However, the broader trend is less subdued, as a strong performance from retailers in January and February means the three-month picture shows positive growth for the first time since August 2021.

“In the latest month, department stores, clothing shops and garden centres experienced heavy declines as significant rainfall dampened enthusiasm for shopping. Food store sales also slipped, with retailer feedback suggesting the increased cost of living and climbing food prices are continuing to affect consumer spending.”

Helen Dickinson, CEO of the British Retail Consortium

Helen Dickinson, CEO of the British Retail Consortium:

“Retailers are optimistic for the big events on the Spring calendar such as the King’s Coronation, and other bank holidays. However, the removal of government support for household bills from this month will mean consumer discretionary spend will be under additional pressure.

"We need government to help retailers keep prices down and shore up consumer confidence by ensuring any additional regulatory burdens are kept to a minimum, as these additional cost pressures will inevitably mean that consumers will be further squeezed.”

Samantha Philips, Partner at McKinsey & Company:

“Retail sales volumes in March were lower than expected, partly driven by a less upbeat Mother’s Day. Mothering Sunday can act as a boost to retail sales, driven by the desire of families to celebrate. This gift has failed to materialise and kept retail sales fairly static with consumers mindful of incremental expense".

“On top of that, the lack of spending in food and clothing, is a signal that consumers are still very cautious about the economic outlook. With bad weather dampening consumer demand, retailers will be hopeful that April’s festivities - Easter and Ramadan - prompted more sales. And, that the Coronation Bank Holiday in May will act as a reason for further celebration".

“The proportion of sales online rose to 25.8% from 25.4%, which may suggest retailers are connecting with consumers outside of their own stores. Our recent research shows retailers are looking to third-party marketplaces, such as Amazon, to fuel new growth, with 92 percent of consumer brands and retailers now present on third-party marketplaces globally, offering unique products and running agile experiments.”

Oliver Vernon-Harcourt, Deloitte

Oliver Vernon-Harcourt, Head of Retail at Deloitte:

“The retail sector failed to spring into action in March as wet weather and persistent high inflation deterred consumers from visiting the high street. With food prices continuing to rise at their fastest annual rate in almost half a century, consumers have cut back on the size of their grocery baskets.

“Meanwhile, as non-food sales continue to fall, it will be crucial in the near future to focus on managing product ranges so that pricing, promotions and variety are all appealing to consumers sensitive to the cost-of-living. This will be key in driving sales and, in turn, avoiding excess stock and working capital at the end of the season.”

Karl Stone, Head of Voyado UK

“Following the encouraging ONS retail stats for February, retail sales have, unfortunately stunted yet again. Non-store retailing volumes in particular, have declined by 0.8%; consumers didn’t see Mother’s Day or early Easter festivities as a reason to spend big and a of sign the pinch of the cost-of-living crisis and inflation remains sharp.

“Despite this month of negative growth, the retail landscape has shown that it can bounce back from sales declines as it continues to remain resilient. With consumer spending confidence falling again retailers must communicate effectively and the turn to Spring/Summer offers retailers a prime opportunity to re-engage with consumers.

“By leveraging customer data and implementing targeted marketing strategies, retailers can increase customer engagement and sales this summer. From February’s stats we also know consumers were primarily spending on discounts and bargains – offering exclusive discounts and offers will also remain imperative for retailers to stay competitive. As always balancing these incentives with maintaining brand perception will be crucial and a keen understanding and targeting of the customer groups that are influenced by discount will protect the brand and margin among retailers’ wider audience.”

Silvia Rindone, EY UK&I Retail Lead

Silvia Rindone, EY UK&I Retail Lead:

“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.”

Erin Brookes, Managing Director & Head of Retail in Europe, Alvarez & Marsal:

“With inflation remaining high in March, it is unsurprising that shoppers continue to curb their spending in more discretionary categories. Food bills are weighing heavily on household budgets, with customers getting less for their money. However, there is hope on the horizon, as inflation should abate in the coming quarter and, if passed on to the consumer, positively impact pricing.”

“Retailers need to seize this opportunity, particularly ahead of the bank holidays and better weather to come, when customers should be in the mood to spend. To capitalise on the ‘once in a lifetime’ celebratory mood that will occur for the King’s coronation, it will be vital that retailers offer a well-defined value proposition, and a sense of fun and celebration in service offering and assortment.”