Silvia Rindone, EY UK&I Retail Lead, comments:
“Today’s ONS retail sales data reflect the challenges facing consumers, with inflationary pressures and falling confidence leading to a decline in sales volumes for second consecutive month.
“Food sales also fell in September, and we are now seeing significant trading down as consumers look for private label and cheaper alternatives to manage their spending. This will become more important as we enter the festive season: the latest EY Future Consumer Index (FCI) found that nearly forty per cent (39%) of UK consumers expect to spend less this Christmas, while spending on festive food is likely to be down as one in ten (12%) consumers plan on inviting fewer people to celebrations.
“Non-store retail continued its downward trajectory, falling 3% in September. However, as we enter the ‘golden quarter’, and with Black Friday a few weeks away, this may change. The FCI also found that that nearly two fifths (41%) of shoppers are planning on doing most of their deal hunting online this year. The news will be welcome to many pure-play online retailers, particularly fashion retailers, who have been experiencing high commodity prices, rising delivery costs and product returns as well as issues with excess stock.
“The biggest challenges for retailers this Christmas will be pricing, inventory and how to deal with falling demand. The latest EY ITEM Club Autumn Forecast expects the UK economy to be in recession until the middle of 2023 so against this backdrop of increased uncertainty, consumers are likely to delay spending as late as possible to help manage their finances. Many retailers have already started heavy discounting to tempt shoppers to bring forward their Christmas spending.
“As consumers become more cautious about what they spend their money on, retailers and brands will need to ensure they plan and position their offers this year for small, more intimate events and more thoughtful gifting which focuses on usefulness rather than indulgence.”