New year, same old problems as political uncertainty hits retail growth

UK retailers have made a stuttering start to 2020, both on the high street and online.

Total sales increased by 0.4% in January, against a rise of 2.2% in January 2019, according to the BRC and KPMG. Retail sales were flat on a like-for-like basis from January 2019, when they had increased 1.8% from the preceding year. Online non-food sales were up by 2.5%, against a growth of 5.4% during the same period last year.

Helen Dickinson, Chief Executive at British Retail Consortium, comments: “January saw a return to growth, however recent political uncertainty and a decade of austerity appear to have ingrained a more thrifty approach to shopping among consumers.”

As sustainability continues to rise up the agenda, many customers are switching to more environmentally friendly products or simply choosing to buy less. These effects are not just limited to the high street as growth in online purchases also slowed.

Paul Martin, Partner, UK Head of Retail at KPMG, adds: “January is usually a quieter month for retail, and although static sales might not appear triumphant, at least it is no further deterioration. Consumer confidence has started to return post-general election, but we have not experienced any major leaps for the sector yet.”

The semi-positive performance could, he adds, be the result of aggressive discounts and consumers’ preoccupation with bagging a bargain, which is not always good news when looking at bottomlines.

“With Brexit ‘technically’ behind us, retailers will be hoping that consumers feel confident enough to reengage. But much remains unknown as we work towards defining our future relationship with the EU. Retailers are walking a tightrope between navigating any impact on their industry alongside ongoing changes in consumer behaviour,” he concludes.