EY comments on today’s ONS retail sales figures for April
“After a period of unusually poor spring weather, both retail sales and volumes rose in April, however overall inflation continues to impact figures. The Easter bank holiday weekend positively impacted both food and non-food sales, which rose by 0.7% and 1%, following a fall the previous month. While a marginal uplift, this is the first-time seeing growth in food sales since August 2022.
“Whilst consumer confidence appears to be recovering, uncertainty about what this means for the average shopper has meant many are continuing to keep a tight grip of their finances. Consumers are continuing to make more considered decisions about how they spend their money, which, when combined with persistently high price inflation, is creating a challenging environment for retailers. EY-Parthenon’s recentProfit Warnings analysis found that almost a third (30%) of UK-listed retailers have issued two or more profit warnings since the start of 2022.
“As we enter the summer months, the outlook could be brighter. Inflation should continue to fall and the reduction in wholesale energy prices will lower both household bills and business costs. With good weather on the horizon and strong forecast wage growth, consumers could be feeling more optimistic about spending any discretionary income.
“In the meantime, retailers must navigate the challenges of determining pricing strategies geared towards the frugal consumer. With many consumers turning to private label products, the own-label specialists are benefitting from this shift in mindset. It’s not just about having the cheapest product though; if retailers wish to improve their market share, product quality, breadth of range and importantly value for money, also need to be explored.”
Silvia Rindone, EY UK&I Retail Lead