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Fears more High Street stores could collapse as spending falls

·2-min read
Total retail sales across the UK fell by 0.3% in April (PA Wire)
Total retail sales across the UK fell by 0.3% in April (PA Wire)

More retailers could collapse in the coming months as higher inflation and falling incomes force consumers to curb their spending.

Total retail sales across the UK fell by 0.3% in April, according to the latest retail sales monitor from the British Retail Consortium and KPMG, compared to a three-month average growth of 3.2% and a 12-month average growth of 6.4%.

Spending on big-ticket items including electrical goods, furniture and homewares was particularly hard hit, compounded by manufacturing delays in China.

Paul Martin, UK head of retail at KPMG, warned that the squeeze on disposable incomes risked sending some shops to the wall.

“Against a backdrop of falling consumer confidence, the retail sector has a bumpy time ahead as they face spiraling cost pressures from all directions,” he said, adding that many retailers will have to raise prices to protect their margins.

“The longer we see high inflation and real household incomes falling, the more likely it is that consumers will change their spending behaviour, prompting a decline in the health of the retail sector and possibly more casualties on the high street.”

Convenience store chain McColl’s collapsed on Friday, but was thankfully quickly rescued out of administration by Morrisons last night.

Morrisons agreed to safeguard around 16,000 jobs and allow most of the 1,300 high street stores to stay open.

BRC chief executive Helen Dickinson said rising commodity prices, transport costs, labour shortages, delays at ports, and the war in Ukraine were weighing on businesses.

She said: “Retailers will continue to do all they can to mitigate the effects of these cost rises, but unfortunately they cannot absorb them all.”

According to the BRC, food sales fell 1.3% over the three months to April, compared with a 12-month average growth rate of 0.7%.

While sales of clothes and footwear continued to rise, growing 6.9% in the period, shoppers limited their spending on non-essential items such as products for the home.

April sunshine helped to boost sales of fashion and garden goods, including outfits for special occasions such as weddings.

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