Low growth for retail sector in 2023 predicted
Retail sales are only expected to grow between 2.3% and 3.5% in 2023, according to research from the British Retail Consortium (BRC).
However, sales are expected to pick up towards the end of the year with inflation likely to slow and consumer confidence expected to pick up, with the BRC anticipating a growth of 3.6% to 4.7% compared to 1% to 2.3% in the first half.
The analysis suggests that food sales growth, which has continued to outperform non-food sales, will fall slightly in the second half of the year. However this is expected to be at a slower rate than the anticipated decline in food inflation. Non-food sales are expected to move from decline to growth.
2022 saw low retail growth at levels below soaring inflation rates, fuelled by the war in Ukraine, suggesting sales volumes rates were below that of 2021. Energy and food prices increased by over 10% on a year-on-year basis in the second half of 2022. During this period, despite a growth in retail sales of 2.3%, inflation levels of 11% suggested a fall in sales volumes of both food and non-food.
Kris Hamer, director of insight at the BRC, said: “The first half of the year is likely to challenging for households and retailers. Ongoing inflation will make sales appear to be rising, but we expect falling volumes as consumers continue to manage their spending. We also don’t see many signs at this stage of retailers’ input costs easing”.
“There is cause for optimism in the second half of 2023, when we expect inflation to ease and improving consumer confidence to result in an improvement to sales growth, and corresponding volumes”, he added.