Brexit uncertainty has hit consumer spending: Helen Dickinson of BRC
“ Uncertainty surrounding the UK’s imminent exit from the European Union has hit consumer spending,” is how Helen Dickinson of BRC described the Brexit effect on retail sales growth last month.
The chief executive officer of British Retail Consortium (BRC) said that shoppers have been reluctant to spend this February, holding back retail growth. The slowdown was not limited to physical stores, with an increase in online non-food sales well below the twelve-month average. This suggests that shoppers are increasingly aware of the risk of a no deal Brexit, it is likely that uncertaintly has driven this cautious approach to retail spending.
The BRC-KPMG Retail Sales Monitor for February 2019 found online sales of non-food products soared up by 5.4% during the month. That’s down from growth of 6.5% in comparison to last year. That’s below both the three-month +5.6% and the 12-month (6.9%) longer-term trends.
“With consumers increasingly aware of the risk of a no deal Brexit, it is likely that uncertainty has driven this cautious approach to retail spending. If the government wishes to reassure both the public and businesses, they should ensure a chaotic no deal – which would lead to higher costs, higher prices, and less choice for consumers – is taken off the table with immediate effect.”
– Helen Dickinson OBE, chief executive officer, BRC
“Following a modest recovery in January, February saw a slowdown in sales. While consumer spending has so far remained relatively resilient, driven by factors such as low unemployment and wage growth, it would seem that continuing political and economic uncertainties are beginning to notably affect shoppers’ spending habits. Across all categories, there was sluggish growth, and the milder weather appears to have shifted the focus away from indoors with furniture sales declining – and not even Valentine’s Day could boost sales in the stationery category. However, the full impact of the recent unseasonably warm weather is yet to be seen, especially for the clothing categories, and online sales growth remained steady. Non-food continues to be under more pressure than grocery, with shoppers focusing on the essentials. To manage these dynamics, retailers have to continue managing cost and margin and carefully assess how to gain market share in a broadly flat market.”
– Paul Martin, UK head of retail, KPMG
Brexit uncertainty appears to drive the change in consumer behaviour. While some consumers are cutting down on their spend or even stockpiling essential items, the challenge retailers face is how they can attract shoppers back to their online and physical stores.
Retail response on Brexit uncertainty
“The latest BRC figures may well concern retailers as consumers show a reluctance to spend in February despite a growth in income. Perhaps unsurprising, though, given the current challenging political and economic environment. However, retailers have a huge opportunity to create stand out shopping experiences to delight their customers and encourage sales, especially with warmer climates around the corner.We are now living in a time when online brand experiences are often more important than the products themselves. The currency of experience and a human touch, whether offline or online, can generate joy, emotion and excitement in the consumer during times of uncertainty. As we approach spring and some special retail dates like Easter and the summer sales period, it’s really important for brands and retailers to keep innovating and delivering highly visual, emotive and tailored shopping experiences that keep customers interested, buying and coming back for more.”
– Angel Maldonado, founder, EmpathyBroker
Have your consumers started spending less with you in their attempt to save money?