Retail sales were battered in March as consumer confidence waned in light of rising inflation.
Total sales increased marginally by 3.1% in March compared with the same month last year when all ‘non-essential’ retail was shut, according to the BRC-KPMG Retail Sales Monitor, against an increase of 13.9% in March 2021.
Like-for-like sales declined by 0.4% when they had grown by 20.3% in March last year.
This was below the three-month average growth of 3.2% and the 12-month average growth of 6.5%.
Food sales also decreased over the three-month period to March, down 2.6% on a total basis, and decreased 3.1% on a like-for-like basis. For the month of March alone, food was also in decline.
BRC-KPMG attributed much of this decline to the timing of the Easter bank holiday weekend, which falls in mid-April this year.
On the other hand, non-food sales increased by 14.9% on a total basis and by 8.6% on a like-for-like basis over the same three-month period.
The return of the shop
The return of stores in 2022 meant that in-store sales of non-food items grew 92.9% on a total basis and 74.9% on a like-for-like basis.
In comparison, online non-food sales declined 29% during March, compared with a growth of 64.7% in March 2021. Online non-food penetration continued to decline, falling by 38.5%.
British Retail Consortium (BRC) chief executive 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.
“Beauty and fashion items were popular last month as consumers took to their town and city centres for some retail therapy in the run-up to Mother’s Day.
“While it is promising to see experiential shopping back in fashion, much in-store retail has not recovered to its pre-pandemic level. Online sales also decreased compared with last year, but remain well above 2019 levels due to investment by retailers in their digital offer.
“The rising cost of living and the ongoing war in Ukraine have 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. There is also potential for further supply chain disruption, with China putting key manufacturing and port cities into lockdown.
“Ultimately, consumers face an enormous challenge this year and this is likely to be reflected in retail spend in the future.”
“Retailers are facing their own battle with rising costs and inflation”
Don Williams, KPMG
KPMG retail partner Don Williams added: “Sales growth in March rose at the slowest rate so far this year, suggesting clouds on the horizon as household budgets come under pressure from rising costs, an increasing tax burden and competition from holidays. There is concern about what this could mean for consumer confidence and the impact on discretionary spend.
“Additionally, retailers are facing their own battle with rising costs and inflation, and are walking a tightrope between absorbing rising costs themselves or passing these on to consumers, when competition for share of a shrinking wallet is increasingly fierce.
“The best retailers will continue to balance attention on areas that can yield cost and efficiency gains with a clear understanding of their customer and what they want to buy and how.
“The primary concern now is whether consumers will choose to reduce their physical and virtual shopping to counteract rising household bills and reduced household income.”
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