UK retailers are expecting headwinds this year in the face of tightening consumer purse strings, according to a trade body.
The British Retail Consortium warned the cost of living crisis was likely to feed through to consumers’ spending habits, while supply-side expansion in response to easing restrictions would increase competition among retailers for customer spend.
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Helen Dickinson OBE, chief executive of the BRC, pointed out spending on food dropped between November and January as people ate out more, a trend which could begin to weigh on the high street.
“Retailers face competition from other spending opportunities as the public flood back to restaurants, cafes and live events.
“Furthermore, rising inflation, driven by higher costs of production, higher energy and transport prices, as well as other looming price hikes this spring will mean consumers will have to tighten their purse strings.”
KPMG’s retail sales monitor showed sales bounced 11.9% in January against the same month last year thanks to fewer restrictions.
The growth of online retail was evident in the 31.8% jump in these sales since January 2020.
Paul Martin, UK head of retail at KPMG, said the rise of home buying led to increased demand for household appliances, electronics and homeware.
“Retailers will be relieved that we started the year without further lockdowns as consumer demand continued strongly on the high street with sales up 11.9% on last year.
“However, this unusually strong performance for January which is traditionally a slower month, should be put in the context of last year’s lockdown restrictions.”