Retailers are bracing for a fall in consumer spending
“The cost of living crisis came home to roost for retailers in April, with sales growth going into decline for the first time in 15 months.
Sales of clothes and footwear continued to see growth on the high street and online, but conscientious consumers curbed unnecessary spending with technology and items for the home bearing the brunt of spending cutbacks. Food and drink bounced back with 3% growth in April – largely due to Easter falling later this year.
With interest rates and inflation rising and the Bank of England warning of a possible recession, the squeeze on disposable household income is starting to have an impact on the high street. Against a backdrop of falling consumer confidence, the retail sector has a bumpy time ahead as they face spiraling cost pressures from all directions. Many retailers will have no choice but to raise prices to protect margins, but the longer we see high inflation and real household incomes falling, the more likely it is that consumers will change their spending behaviour, prompting a decline in the health of the retail sector and possibly more casualties on the high street.”
