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Retailers suffer longest slump in sales since 2020 lockdown

Shoppers
Shoppers

Retailers are suffering from the longest slump in sales since the pandemic, as shoppers cut back for the fifth successive month.

New figures from BDO show that sales across fashion, homewares and lifestyle dipped by 1.3pc in February, as the consultancy firm warned of an “almost unprecedented” downturn.

Sales in the fashion sector were hit the hardest, BDO said, as sales dropped 8.2pc compared to last year.

February’s data marked the first time retail sales contracted for five straight months since 2020, when the majority of non-essential shops were forced to close amid lockdown restrictions.

Sophie Michael, head of retail and wholesale at BDO, said: “This run of negative like-for-like sales covers both the build-up to Christmas, which retailers would expect to be their busiest and most profitable period, and the stock clearance period in the new year sales.

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“Since we started tracking both online and in-store sales in 2017, the only time we’ve seen results this poor was during the 2020 Covid-19 lockdown period, when the majority of non-essential retailers were forced to remain closed.”

BDO said that despite online sales increasing by 2.9pc since last year, a 2pc drop in in-store sales meant that the overall performance of the retail sector was in negative territory.

The homewares sector also performed badly, declining 4.2pc.

More than half of retailers polled by BDO said that rising operational and borrowing costs would be their main challenge over the next six months.

Ms Michael said the retail sector, which generates £110bn annually, would be hoping for targeted support in this week’s Budget.

Several long-established retail brands have collapsed under the weight of these costs, she said, leaving “notable gaps” on UK high streets.

She said: “While the stiff competition for consumers’ discretionary spend remains and retailers experience continued pressure on their finances, those that fail to adapt and adjust their business models to their customers’ demands will be at risk.

“Retailers will increasingly be challenging themselves and asking whether certain stores are viable, or if the costs of running their existing physical footprint are simply too high.

“We should expect to see more consolidation of brands and acquisitions over the next six months as a result.”