The UK economy has been witnessing a sad year on year dip in retail spending for the past seven years. This reflects consumer confidence reactions to increased living costs, inflation, static income levels, change in shopping attitudes and fears sorrounding the Brexit outcome.
2017 seems to be the worst of them all: according to the Office of National Statistics, sales in the first quarter of 2017 were down 1.4pc compared with February’s 1.8pc decline.
senior statistician at the ONS, Kate Davies said, “This is the first time we’ve seen a quarterly decline since 2013, and it seems to be a consequence of price increases across a whole range of sectors.”
We have witnessed the highest increase rate in prices since 2012. Average store prices had increased to 3.3pc this year according to the ONS.
Although spending increased in July due to high food items purchase, experts still decry the slow decline. Consumers are now taking a more prudent and cautious approach to spending: Brits are now refraining from splashing the cash on the good things of life, something that was more or less becoming an unofficial way of life in recent years.
According to Visa’s consumer spending index, consumers have gone as far as cutting down spending on new clothes, foreign holidays and cars. Visa reported that the 0.8pc year-on-year decline in July of 2017 was worse than the 0.2pc dip in June but not as bad as May’s 0.9pc decline.
Visa’s Kevin Jenkins, managing director in the UK and Ireland bemoaned that, “Consumer spending fell for the third month in a row in July, the first time overall spending had fallen for three consecutive months since February 2013, the figure provides further evidence that rising prices and stagnant wage growth are squeezing consumers’ pockets”.
Things aren’t expected to get better, though, as prices are predictably going to increase due to the continuous fall in value of the Pound in the exchange market thus, import prices will keep going through the roof.
Another important factor to note especially looking at the decline in retail shops is online spending. It’s not all gloomy there as online sales has seen an unprecedented surge of 15pc in 2016. They now account for 18pc of total sales compared to 2.8pc ten years ago. This has hurt high street bric-and-mortar shops since consumers are now favouring online stores more.
Avoiding Further Impending Sales Decline
Advocates are now calling for a more favourable Brexit strategy and single market policy to avoid the impending decline on the retail market.
Retail shops are now adopting the omnichannel marketing strategies to boost sales since the e-commerce bloom.
Physical retail stores should pursue the multi-channel option if they want to stay in business. Pursuing the online idea further boosts competition and encourages more retail spending. What’s more, businesses can skirt property costs and business rates with the adoption of the multi-channel model.
Other methods to increase sales involve, integrating innovative sales strategy like creating ample spacing in shops for better consumer experience, and acquiring better insurance plans (both online and physical stores) to boost consumer confidence.
Despite the strong outcry and rising prices, the UK retail sales saw a boost in August but this sudden change shouldn’t stop efforts to better the economy and avoid further retail decline as the ‘gathered clouds’ on the retail business are not yet cleared.