Retail sales volumes have risen by 0.5% in April 2023, the ONS reports

Retail sales volumes are estimated to have risen by 0.5% in April 2023, following a fall of 1.2% in March 2023 (revised from a fall of 0.9%), the ONS reports.

Sales volumes rose by 0.8% in the three months to April 2023 when compared with the previous three months; the highest rate since August 2021 (1.3%).

Non-food stores sales volumes rose by 1.0% in April 2023, following a fall of 1.8% in March when poor weather conditions throughout most of March affected sales.

Food stores sales volumes rose by 0.7% in April 2023, following a fall of 0.8% in March 2023; sales volumes were 2.7% below their pre-coronavirus (COVID-19) February 2020 levels.

Non-store retailing (mainly online retailers) sales volumes rose by 0.2% in April 2023, following a fall of 1.4% in March 2023.

Despite falling fuel prices, automotive fuel sales volumes fell by 2.2% in April 2023, following a rise of 0.1% in March 2023.

Silvia Rindone, EY UK&I retail lead, comments: “After a period of unusually poor spring weather, both retail sales and volumes rose in April, however overall inflation continues to impact figures. The Easter bank holiday weekend  positively impacted both food and non-food sales, which rose by 0.7% and 1%, following a fall the previous month.  While a marginal uplift, this is the first-time seeing growth in food sales since August 2022.

“Whilst consumer confidence appears to be recovering, uncertainty about what this means for the average shopper has meant many are continuing to keep a tight grip of their finances. Consumers are continuing to make more considered decisions about how they spend their money, which, when combined with persistently high price inflation, is creating a challenging environment for retailers. EY-Parthenon’s recent Profit Warnings analysis found that almost a third (30%) of UK-listed retailers have issued two or more profit warnings since the start of 2022.

“As we enter the summer months, the outlook could be brighter. Inflation should continue to fall and the reduction in wholesale energy prices will lower both household bills and business costs. With good weather on the horizon and strong forecast wage growth, consumers could be feeling more optimistic about spending any discretionary income.

“In the meantime, retailers must navigate the challenges of determining pricing strategies geared towards the frugal consumer. With many consumers turning to private label products, the own-label specialists are benefitting from this shift in mindset. It’s not just about having the cheapest product though; if retailers wish to improve their market share, product quality, breadth of range and importantly value for money, also need to be explored.”

Paul Martin, UK head of retail at KPMG, said: “April saw a difficult month for the retail sector with sales growth by value at below 5% on last year, against an inflationary background of almost 9%.  This was even worse for those retailers operating in the food and drink space, battling against inflation of nearly 20%.

“Whilst falling inflation in the wider economy could provide a boost to consumer confidence, uncontrollable food inflation shows little sign of coming down in the near future and is having a significant knock on effect on non-essential spending.  The grocery sector is the fastest growing part of the consumer wallet at the moment, so consumers are spending more of their money in the one area that is getting disproportionately more expensive.

“The retail sector has done a good job of fending off the challenges of the last three years, and it is testament to its strength that we haven’t had more casualties given the economic headwinds.  Providing inflation continues to fall and consumer confidence returns, we could see the sector rebound and return to profitability by the end of the year.”

Oliver Vernon-Harcourt, head of retail at Deloitte, said: “April saw a surprising uplift in retail sales despite ongoing inflationary pressures. The Easter Bank Holiday weekend likely contributed to consumers spending more in department stores and on clothing and accessories. The economic environment remains incredibly tough for many, but consumer confidence is slowly improving from record lows seen in the past year.

“While headline inflation is falling and the weather is improving, food prices remain stubbornly high. This, combined with rising interest rates, suggest all but the wealthiest consumers will continue to be careful about where and how they spend. The importance of loyalty programmes, promotions and great value product will remain key to success for retailers.”

Kelly Askew, Accenture’s retail strategy & consulting lead said: “The boost in trading from the Easter holidays will have brought spring cheer to retailers, and the sector will be hoping that these positive sales continue as we move into the warmer months.  

“Despite this week’s fall in UK inflation, the defining issue of this cost of living crisis remains the price of food. It continues to weigh on both consumers and businesses, as retailers continue to grapple with how much of their own rising costs to pass on to customers.  

“At a time when shoppers are being even more selective about where and how they spend their cash, brands need to give consumers every reason to shop with them as we head into summer. This means a focus on affordability, customer experience, and tailoring their offer to local demand.”