Retail sales on the rise

After a disappointing end to 2019, British consumers began to spend again in January with sales volume increasing by 0.9% after December’s decrease of 0.5%. This increase in sales was much larger than that expected by economists and the biggest monthly increase since March 2019.

Whilst the sales increase in January is positive, it can’t be overlooked that this was from a low base in December when the so-called golden Christmas period for retailers failed to materialise.

Future challenges for the retail sector

2019 was another difficult year for a large number of major retailers with Thomas Cook and Mothercare going bust. The outlook for the retail sector remains challenging with the ongoing shift towards online shopping (Internet sales increased by 4.9% in January 2020 compared to January 2019), the upcoming increase to the National Minimum Wage in April, uncertainty over how re-negotiated trade deals in the post-Brexit era will impact supply chains and now the Coronavirus epidemic.

Andrew Carlisle, managing director at Accenture, said that the retail sector’s struggles “have yet to show signs of abating” adding: “While there was modest sales growth in January, it is not enough for retailers to get excited about.”

Jeremy Thomson-Cook who is the chief economist at payments company Equals Group said: “The British consumer is a hardy beast and having weathered the pre-election uncertainty, we have charged back into the shops” but he did also say that the rebound may not last long.

Conclusion

Retail sales have bounced back in January after a disappointing end to 2019 with Christmas spending failing to live up to it’s hopes. Retailers will be hoping for some respite following the upcoming Budget but there remain numerous challenges for them to adapt to and overcome.

Related articles and content

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50% of all debit card payments are now contactless

e-commerce – a Guide to Trading Online 

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Pete Wilmer

Corporate Finance Partner

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