Retail sales wane in March as consumer confidence sinks
Retail sales growth slowed significantly last month as consumer confidence “continued to sink”, according to the latest BRC-KPMG retail sales monitor.
The monitor revealed that total sales increased by 3.1% in March, slipping back from a 6.7% rise in February, with experts adding that the growth in total sales in March was buoyed by price rises across the sector.
The results were revealed as separate research from Barclaycard showed that rising fuel prices and household bills were starting to affect customer spending patterns, and as the cost of living crisis and rising household inflation provides a new challenge for the retail sector after two years blighted by the pandemic.
The BRC-KPMG data showed that like-for-like retail sales were down 0.4% against the same month last year.
British Retail Consortium (BRC) CEO Helen Dickinson, said: “As consumer confidence continued to sink, March saw sales slow, and while spend remained above last year this likely reflects higher prices.
“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. Ultimately, consumers face an enormous challenge this year, and this is likely to be reflected in retail spend in the future.”
The figures also showed that online non-food sales dropped by 29% over the three months to March as the pandemic-fuelled digital boom continued to recoil.
However, Don Williams, retail partner at KPMG, said that online “penetration rates remain high” as they were compared with a period of shop closures a year earlier.
Meanwhile, total food sales decreased by 2.6% over the three months to March.
Elsewhere, Barclaycard’s latest credit card data showed that consumer spending was still significantly ahead of pre-pandemic levels as people spent more on hospitality, but still highlighted some pressure on consumer confidence.
Card spending in March increased by 17.7% against levels from the same month in 2019, as people spent more on essential items.
The increase was particularly driven by a higher spend on fuel, which soared by 26.1% after prices rocketed.
Jose Carvalho, head of consumer products at Barclaycard, said: “Many sectors saw strong growth in March compared to the same period in 2019, as sunnier weather encouraged Brits to socialise at pubs and bars, book staycations and update their wardrobes for spring and summer.
“However, rising fuel prices and household bills are clearly starting to influence consumer behaviour, with many Brits changing their travel and shopping habits to save money.
“While this may dampen growth in the months ahead, we shouldn’t overlook the expected heatwave later in April, and the fast-approaching Easter holidays, both of which are likely to boost non-essential spending.”