Shoppers are spending less than they were a year ago, as the rising cost of living squeezes incomes, according to the body representing retailers. Sales, in-store and online, fell for the second month in a row in May, the British Retail Consortium (BRC) said.
Sales rose sharply last year after pandemic restrictions eased, but that “spending bubble” has now burst, the BRC’s Helen Dickinson said.
Total retail sales in May declined by 1.1% compared to May 2021. That was a sharper slowdown than in April, when BRC figures showed a fall of 0.3% compared to April 2021.
Sales of clothing, footwear and accessories, including in fashion and beauty, rose, as people prepared for holidays and summer social occasions, including the Jubilee.
But consumers were not buying bigger ticket items, such as furniture and electronics, the BRC said, as it published its latest monthly data, which it collects from the UK’s medium and larger retailers. With inflation running at historic highs, what people are buying is costing them more. So a small drop in total sales masks a much larger drop in the volume of goods sold, once inflation is accounted for, the BRC added.
“It is clear the post-pandemic spending bubble has burst, with retailers facing tougher trading conditions, falling consumer confidence, and soaring inflation impacting consumers’ spending power,” said Ms Dickinson, the BRC’s chief executive.
The fall in May marks the second consecutive month of declining retail sales, as reported by the regular BRC-KPMG retail sales monitor.
It comes at a difficult time for retailers, who are also facing rising costs, especially of energy, transport and labour, which combined were “forcing retailers to increase their prices”, Ms Dickinson added.
The share of sales that take place online, as opposed to in physical stores, appeared to have stabilised, the BRC added. After rising sharply while pandemic restrictions were in place, online sales were “settling” at around 39%, compared to 30% pre-pandemic, the BRC said.
“Retailers will be hoping that a post-Jubilee and summer feel-good factor begins to improve confidence amongst some shoppers – as presently overall confidence levels are lower than sales may suggest,” said Paul Martin, UK head of retail at KPMG.
Julie Abraham, chief executive of home entertainment retailer Richer Sounds, said: “It’s tough out there for everybody.
“We’ve seen a definite slowdown and we’re having to work that much harder to give better value than ever,” she told the BBC‘s Today programme. She added that shoppers were “far more savvy now and looking round for a good bargain”. “So whereas sometimes it might have been more of an impulse purchase, nowadays they’re looking very carefully at what they want to buy.”
Over the four-day Jubilee bank holiday weekend, people did spend significantly more than the equivalent dates last year (which did not include a bank holiday) data from Barclaycard on Monday suggested.
“Despite wider concerns around the cost of living, the hospitality sector especially will be pleased by this welcome boost, having missed out on two years of unrestricted trading,” said Barclaycard Payments chief executive Rob Cameron.
Spending at restaurants rose 41.5% over 2-5 June. Spending was up 74.2% at pubs, bars and night clubs, while spending on entertainment was up 67.3% and spending on public transport was up 38.8%, Barclaycard Payments said, based on credit and debit card transactions.