Retail Sales Increase In Spite Of Brexit Nerves
Despite a poor March and terrible weather throughout April, British retailers have reported a resurgence in traffic that is actually up on this time last year, allaying fears of “Brexit wariness” in retailers for now.
In fact, in complete disregard of economist’s fears that the upcoming June EU Referendum would damage sales in the run-up to June 23rd, sales for April were up 4.3% on the previous year, and even March finished at only 0.5% down after a dismal start to the month.
ONS statistician Melanie Richard reported that “clothing retailers continue to drag down growth on the high street, with thewir spring and summer ranges being battered by the cold, rainy weather and an increasing trend among shoppers to spend more on going out and travelling, and far less on clothing and high-street shopping.”
The ONS also reported that the early Easter bank holiday weekend this year was a kick to retailers, as Ian Geddes of Deloittes confirmed, saying that “the early Easter hurt retailers’ summer ranges as shoppers did not have a dedicated weekend to take advantage of coordinated sales, the summer ranges had not yet fully launched due to how early it was, and this was then exacerbated by an additional month of unseasonably cold, wet weather. The result was exceptionally poor sales in the clothing and fashion sector – however, lower sales prices boosted botht he volume and value of sales in April compared to March.”
He added that “It’s obvious from our research that consumers are tending towards a long-term shift in spending, from retail to leisure activities. Reduced inflation rates (0.3%) have boosted customer’s purchasing power, allowing them to spend more on luxury items like holidays and nights out, while low prices on everyday items has limited the amount that spending on essentials can possibly rise – and these two together are really being felt by retailers.”
The pressure from online retailers is also contributing to the press on brick-and-mortar stores. Internet retailers continued to expand last month, with their sales increasing by 9.3% on this time last year, according to ONS. This year, the amount spent on online shopping was 13.4% of all retail shopping.
Despite all these doom-and-gloom portents, the high-street retail section performed extremely well in April, expanding both on the previous month and the previous year.
Retail consumers can be volatile indicators of the economy as a whole, but these spending increases definitely help allay fears that British customers have run out of steam. The worry remains that customers might hold off on purchasing big-ticket items until after the June Referendum, but Alan Clarke, economist at Scotiabank in London, says that “this marks an excellent start to the second quarter.” He goes on to say that employment is at a new high, and with spending increasing, he finished his report with a telling phrase.
“Brexit-Vote jitters? What Brexit-Vote jitters?”