March retail sales data published by the Office for National Statistics (ONS) this morning reveals that sales volumes fell by 1.4% in March 2022 following a fall of 0.5% (revised from a fall of 0.3%) in February 2022. The largest contribution to the fall coming from non-store retailing in which sales volumes fell by 7.9% over the month following a fall of 6.9% in February; however, despite these drops, sales volumes were 20.3% above their pre-coronavirus February 2020 levels.
Which begs the question, are we seeing the impact of the cost of living crisis beginning to make itself felt or are these figures reflecting seasonal adjustments when taking Easter into account? And whilst it is the big chains which get the headlines when it comes to sales figures, any fall in spending is going to hurt the smaller independent retailers in a disproportionate manner.
Government High Streets Task Force expert and ShopAppy founder, Dr Jackie Mulligan was clear in her assessment: “For countless small independent retailers, March was merciless. The thousands of small high street businesses we work with said it was extremely challenging last month and this data reflects that”.
“Inflation is really starting to take its toll on people’s finances and that is rapidly impacting sales on the high street. We have to hope that the greater emotional bond between people and their local high street shops will power sales in the months and years ahead, because small retailers are also having to cope with significant levels of debt accrued during the pandemic. There are no end of challenges for shoppers amid the cost of living crisis but we’re urging people to shop local whenever they can. The small businesses that line the country’s high streets need our support more than ever”.
A cross section of small independent retailers from differing retail sectors serves to demonstrate that although there is significant pressure on small retailers, it’s not as straightforward as one might imagine.
Dave Kelly, is co-founder of Bristol-based butcher, Ruby & White, he had this to say; “In our experience, people haven’t swapped sirloin steaks for braising steak quite yet…..but we’ve found that the pandemic has changed people’s socialising habits. Staying in is the new going out as it’s much cheaper and people can afford to drink and eat better in their own homes rather than in restaurants. The health of an entire economy can in many respects be determined by the cuts of meat people buy.”
Inflation is really starting to take its toll on people’s finances and that is rapidly impacting sales on the high street. We have to hope that the greater emotional bond between people and their local high street shops will power sales in the months and years ahead, because small retailers are also having to cope with significant levels of debt accrued during the pandemic.Dr Jackie Mulligan
Victoria Jenkins, CEO of London-based fashion retailer, Unhidden said, “Sales are currently slow for us, which is no surprise given that the cost of seemingly everything is going through the roof. Inflation and soaring energy bills are hitting people’s wallets hard. An additional challenge for us, compared to fast fashion brands, is that we are made to order, which means producing items is much more time-intensive”.
However Elizabeth McQuillan, an artisan jeweller at Boho Silver, presented a different perspective; “As an online micro-business offering unique handmade jewellery, we had expected a decline in sales given the current global climate. After all, you would expect purse strings to tighten and customers to sit tight amid the cost of living crisis. In our case, we have seen an interesting shift in customer purchases: though we have had fewer sales, the sales we have had have been higher value purchases. Quality items are seen as an investment. Smaller, inexpensive and easily reproducible jewellery that you might have thought would see greater interest have actually seen a drop in sales. The consumer is still spending, but in a more considered manner.”
Customer spending behaviour has never been harder to predict when one considers the cost of living pressures which are now beginning to be felt, within the context of people emerging from the pandemic with burgeoning bank balances after two years of saving. Which is why trying to predict consumer behaviour is now more important than ever as retailers large and small face rising costs and an uncertain future.
And all this means that supply chains, inventory management, demand management, the intelligent use of data and ensuring every thing is connected to everything should now all be major components of any retail strategy.
Andrew Busby is the founder of Retail Reflections and Global Retail Director at Software AG.