This article is more than 2 years old

This article is more than 2 years old

Britain’s retailers suffered the sharpest drop in business in more than two decades last month as bad weather, the squeeze on household budgets and the timing of Easter led to a hefty cut in consumer spending.

In the latest evidence of the slowdown in the economy since the turn of the year, the latest health check from the British Retail Consortium (BRC) and KPMG found that sales were down by 3.1% in April, the biggest decline since the survey was launched in 1995.

Spending on non-food items has been particularly hard hit over the last three months, and retailers are braced for tough trading conditions to continue for the rest of the year even though wages have now started to rise more quickly than prices.

Quick guide The state of UK retail's ill-health Show Hide Retailers that have gone bust 2017-18 Toys R Us: 180 stores employing 3,000 staff, collapsed 28 February. Owes £15m in VAT, due by 1 March. Maplin: 200 electronics and gadget stores, founded 1972, also failed on 28 February. Warren Evans: bedmaker went into administration earlier in February. East: fashion brand with nearly 50 outlets folded in January. Juice Corp: business behind brands including Elizabeth Emanuel and Joe Bloggs went under in January. Multiyork: furniture chain with 50 stores went into administration in November. Feather & Black: bedroom furniture and bedding specialist with 25 outlets fell into administration in November. Retailers under pressure New Look has debts of more than £1bn and has lost some of its credit insurance cover, which protects suppliers if a retailer goes bust. In the 10 months to Christmas, sales fell 11% and losses hit £123m. The company intends to close 60 stores and change its fashion ranges, but faces a struggle to win back young shoppers. House of Fraser's Chinese owner, Sanpower, had to stump up £25m to see the store through Christmas and its debt is rated as junk. The retailer is attempting to reduce the size of its stores by 30% and has asked landlords to cut rents. Debenhams, a 178-store chain that is more than 200 years old, is axing one in four of its managers and considering closures to cut costs. It has warned that profits have been hit by lower than expected sales, with profit margins also down as a result of having to cut prices to match rivals. Photograph: Tony Margiocchi / Barcroft Images/Barcroft Media

Retailers have been hit hard by a combination of problems on top of the squeeze on spending, including higher labour costs as a result of increases in the minimum wage, the shift to online shopping and rapidly changing spending patterns.

Toys R Us and the electricals retailer Maplin collapsed in February and a number of retailers, including House of Fraser, New Look, Carpetright and Poundworld, are all pursuing agreements with their landlords to cut their rents and close stores.

The industry had been expecting that year-on-year comparisons would look poor for April, but the BRC’s chief executive, Helen Dickinson, said the problem ran deeper.



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“With much of the spending in preparation for the bank holiday weekend falling in March this year, a record low in sales growth, in contrast to last year’s record high, does not come as a surprise. However, even once we take account of these seasonal distortions, the underlying trend in sales growth is heading downwards.

“The first glimpse of summer may have temporarily lifted clothing and footwear, but non-food sales overall continue to be weak. Consumers’ discretionary spending power remains under pressure and the reality is, that with only a gradual return to solid growth in real incomes expected, the market environment is likely to remain extremely challenging for most retailers.”

The BRC/KPMG survey showed an even bigger drop in monthly sales once the figures were adjusted for changes in the amount of shop-floor space over the past year. On a like-for-like basis spending fell by 4.2%.

The latest official retail sales figures from the Office for National Statistics showed sales volumes were down 1.2% in March, when unusually harsh weather kept consumers away from the shops.

Retailers are now hoping that the royal wedding later in May and the World Cup in June and July will boost spending.

KPMG’s head of retail, Paul Martin, said: “Retailers have got their work cut out to overcome seemingly endless obstacles, whether it be unpredictable weather or the introduction of new regulation, like GDPR [the EU’s General Data Protection Regulation].

“The upcoming months will provide a number of opportunities for retailers to drive sales and navigate this assault course, including bank holidays, World Cup and of course the royal wedding, although it is clear that trading will remain challenging.”

The data and analytics company GlobalData said after a flat year in 2017 clothing and footwear volumes would not start growing again until 2019.

GlobalData’s senior retail analyst, Mamequa Boafo, said: “The prioritisation of leisure spending and preference for experiences over ‘stuff’ will see consumers shopping from their own wardrobes this year, utilising what they have already and only buying clothing items they can truly justify spending money on.”

Facebook Twitter Pinterest Sales in the high street are becoming commonplace, and all-year round. Photograph: Alamy Stock Photo

Retail vacancies fall

Vacancies in the retail industry fell steeply in April as employers reacted to the fall in high street sales by cancelling plans to hire more workers.

According to a recruitment industry survey, the retail sector tumbled from the third most-active recruiter to the 10th compared with April 2017 behind hotel and catering and nursing and medical care, which lay eighth and ninth in the rankings, respectively.

Tom Hadley, director of policy at the Recruitment & Employment Confederation, said a string of high street shop closures fuelled the fall in demand for permanent retail staff last month.

“With consumers increasingly shopping online, it’s a good time for retail workers to think about how their skills translate into other areas within the business – for example, recruiters say there’s huge demand for staff in IT, and there is also a shortage of order pickers and packers.

“Helping people make career transitions will become increasingly important in this fast-changing business and employment landscape,” he said.

Demand for staff is still on the rise in every other sector, he said, but the number of workers chasing each job has dropped steadily since last year.

Engineering and IT and computing staff were the most in-demand, with accounting/financial and executive/professional in third and fourth.