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October’s 1% retail sales increase driven by inflationary pressures
Paul Martin, UK Head of Retail at KPMG, said:
“Despite the price of goods being higher than 2021, retail sales during October grew by just over 1% in value year on year. This increase is being driven by inflationary pressures and does not tell the true picture of sales volumes dropping as consumers purchase fewer products per shop.
Sales across almost every category both online and in store fell year on year as consumers adjust to shrinking household incomes. Furniture, food and health products saved the day on the high street as consumers prepare for a colder days at home. Online retailers saw sales decline in every category apart from furniture, as consumers head to the shops more frequently in search of bargains to manage daily expenditure.
Retailers will be hedging their bets on a successful World Cup and Black Friday to boost sales during the crucial golden quarter. Given the economic headwinds, it is unlikely that the usual festive boost will be enough to counteract the ongoing issues that retailers face with rising costs, squeezed margins and falling demand. Many may feel that they have little choice but to reduce prices to hold onto customers but with their own inflationary pressures to contend with, bumper promotions before Christmas could damage already tight margins further. Whilst Christmas is by no means cancelled as consumers focus on one bright spot amongst the economic clouds, retailers are facing possibly their toughest festive season in a decade as shoppers look to trade down, search out bargains and purchase less to meet the economic challenges ahead.”
