Retail sales volumes (quantity bought) were estimated to be flat (0.0%) in March 2024, following an increase of 0.1% in February 2024 (revised from 0.0%), according to the latest data from the Office for National Statistics (ONS).
Within retail, sales were mixed, with automotive fuel and non-food stores sales volumes rising by 3.2% and 0.5%, respectively. This was offset by falls in food stores and non-store retailers of 0.7% and 1.5%.
Looking at the quarter, sales volumes increased by 1.9% in the three months to March 2024 when compared with the previous three months. This was following low sales volumes over the Christmas period for retailers.
Silvia Rindone, EY UK&I retail lead, comments: “After a challenging start to the year, retail sales remained flat in March after an increase of 0.1% in February.
“Easter did not bring the increase in sales that retailers were hoping for, with sales volumes and values remaining relatively unchanged for a second month. Non-food stores saw sales volumes rise by 0.5%, while food stores and non-store retailers saw a fall of 0.7% and 1.5%.
“As we head into the summer months, retailers are hoping for a turning of the tide as consumer confidence grows.”
“The latest EY Future Consumer Index report found that consumers are becoming increasingly savvy about the value they seek, which transcends price considerations to encompass overall value for money, for example, the recent cost-of-living crisis, saw a significant portion of consumers shift towards private label products. However, as food inflation starts to ease, the price gap between private label and branded products will narrow, which is leading some consumers to revert to branded goods which often provide more innovative ranges.
“Retailers must become attuned to these strategic shifts and, to maintain their appeal, private label products must continue to offer clear price advantages. They also need to ensure they are transitioning to growth, rather than continuously focusing on pricing, ensuring there is a theme of continuous improvement, rather than one-off transformation.”
Gizem Günday, partner at McKinsey & Company, comments: “Retail sales volumes stayed static in March. And household confidence about declining inflation does not seem to be feeding through to increased sales volumes at the tills just yet.
“Despite the special occasions of Mother’s Day, Ramadan and an early Easter, retail sales have remained flat with consumers mindful of any incremental expense.
“Surprisingly, sales volumes in food stores and department stores have fallen, while automotive fuel was one of the main drivers of any growth, perhaps indicating that consumers preferred to travel instead of spending on goods. However, we are likely seeing some preparation for the Spring as there’s some growth in household goods sales.
“Bad weather could also have dampened consumer demand and retailers will likely be hopeful the warmer weather and upcoming May bank holidays will boost momentum.
“However, to capture growth, retailers need to be prepared and look for opportunities to stand out. Flat volume trends despite some movement in footfall indicate that retailers will need to work harder to convert visitors into customers.”
Oliver Vernon-Harcourt, head of retail at Deloitte, said: “For a second consecutive month, there was no growth in sales values or volumes in March, which will be disappointing for retailers who had expected a bigger boost from an early Easter bank holiday weekend. Despite a mixed start to the year, the aggregated volume sales for the first quarter of 2024 are the strongest since the summer of 2022, signalling the start of a recovery for retailers.
“Consumer confidence has hit its highest level in more than two years, with some consumers tentatively loosening their purse strings on more discretionary items, as seen in the rise in non-food sales last month. Though these are positive signs that the consumer sector is turning a corner, there is still much caution amongst retailers and consumers whose purchasing power was hit hard in the last two years. We hope that an improvement to weather conditions in the coming months, combined with bettering consumer finances, will translate into increased spending.”
Matt Jeffers, retail strategy and consulting managing director for Accenture in the UK & Ireland, said: “After a flat February, retailers will have been longing for the start of Spring and the Easter holidays. Easter often encourages renewed spending, with promises of warmer weather to come amidst seasonal promotions. This combined with inflation falling to its lowest level in two and a half years means retailers will be slightly disappointed to not see a rebounding in sales. We saw a falls in food and non-store retailing which was offset by higher spend on fuel and non-food items.
“Given the uncertain economic picture, consumers remain cautious with their spending. As we approach the summer, and after two relatively flat months, retailers need to boost their efforts to attract and retain customers. Since price is a primary concern for shoppers, brands must highlight the value and quality of their products to stand out in the competitive market.”
