• Retail sales rose 1.4% in April
• Shoppers spent more on food and drink in supermarkets
• Clothing sales boosted as people prepared for weddings and holidays
Danni Hewson, AJ Bell financial analyst, comments on Retail sales, Great Britain - Office for National Statistics (ons.gov.uk)
“The unexpected upturn in retail sales could be viewed as a positive sign that the consumer isn’t as bruised as other data suggests. But digging into April’s figures the big uptick in food and drink spend in supermarkets might indicate that people are choosing their kitchen tables over pubs and restaurants as they look to save money. Whilst food spend has been largely unchanged, which suggests people are still being cautious, spend on alcohol and tobacco has soared. Life’s little luxuries, the things that help us get by when times are tough, will have to come in under budget as those budgets are tested.
“Summer 2022 will still be a time for postponed events and much anticipated holidays. After a couple of years where only the top half was visible to most of the world people are updating their wardrobes. That surge in clothing spend is boosting both bricks and mortar stores and online retailers and will be a welcome lift but one that might be short-lived. When you look at other non-food retail, that has dropped back. People can only spend a pound once and when that pound is worth significantly less than a year ago people have to make choices. DIY projects are being parked; home improvements slipped to the back of the queue as people prioritise the way they look over their living spaces.
“If you look at the last three months as a whole, the trend is a downward one and when you add in the latest consumer confidence survey by GFK, optimism seems a bit out of place. Consumers are terrified about how they’ll weather the next few months, every month they are finding that their personal financial situation is deteriorating and most believe the worst is still to come. Retailers are already feeling the pinch and outlooks from a number of big American names over the last week have sent shockwaves through global financial markets. Big ticket items will gather dust on shelves and shoppers will become increasingly cut-throat when it comes to value. Brands which have so far been able to pass on costs have already indicated their decision to hike prices might dent sales volumes as people decide they can live with generic brands if it means they’ll save a few pence here, a few pence there.
“People are making adjustments. Prices at the pump have remained elevated, indeed hitting record highs in April, but motorists have still filled up their tanks. If you need a car to drive to work or take the kids to school, you have no choice but to pay more. It’s all about priorities. This month people have prioritised preparing for future good times, next month they might have to save any spare cash to actually pay for those good times. Retailers know they’re in hot water and can do little to turn down the heat.”