UK shoppers turn to discount stores and second-hand shops amid …
Retail sales rose by 1.2 per cent in February, led by discount stores The Nix Company/unsplash.com
The relatively strong performance of the UK retail sales comes as there was an uplift in the sales volumes in both clothing stores and department stores. These stores made provision for discount options to lead the way as people moved to control costs. The larger implications for UK retailers must be taken into account in this situation.
The depth of the discount side’s power portends difficulty for margins, which are already under intense pressure in the sector. If you include food sales, where volumes rose 0.9 per cent, it appears to be a good month on the surface, but this increase hides a challenging period for the hospitality industry. Rebecca Crook, Chief Growth Officer EMEA, CI&T said the UK retail sales increase is still largely being overshadowed by the high costs of inflation.
According to her, prices of vegetables and fruits are rising at the fastest rates in 45 years, due to the shortages that have particularly impacted them. She noted that the increase in supermarket sales is a reflection of consumers choosing to eat indoors, as opposed to dining out. Crook further said, “With many shoppers now turning to discount stores and second-hand shops amid the cost of living crisis, all retailers are focused on price and value.”
As consumers’ budgets continue to be tight, she believes, this price differentiation will remain important. She, however, advised that UK retailers should not ignore other strategies to win over or attract customers. The Chief Growth Officer also highlighted that UK retailers need a solid digital strategy “to survive this trying period, especially with further store closures likely to be announced by brands in the coming months”.
Simultaneously, the UK’s GfK Consumer Confidence indicator rose to -36 in March, which is its highest level ever in a year. The shift is a result of more improved economic forecasts, however, the reading overall remains low. This indicates that there is still a widespread sentiment weakness, as people struggle with what difficult economic conditions mean for their finances.
Additionally, year-on-year sales fell 3.5 per cent, which is better than the presumed reduction of 4.7 per cent. ONS also reveals that the total non-food sales volumes – clothing, department, household, among others – increased by 2.4 per cent over February, this year. Furthermore, online sales volumes grew by 0.2 per cent.
This was aided by sales promotions. Reacting to these, Nicholas Hyett, Investment Analyst at Wealth Club commented that it would seem as if the UK is finding its shopping habit difficult to kick. He noted that the UK retail sales volumes, irrespective of the tight inflation, have become stronger than expected in February 2023.
Hyett continued, “But beneath that headline, there’s clear evidence that shoppers are being careful with their money. “Growth in non-food sales was driven by discounters and second-hand shops, while the rise in food volumes is attributed to people choosing to eat in and avoid pricey meals out.” The investment analyst stated that shoppers might be more inclined to spend, but only when there’s a deal to be had.
Hyett stressed that over the long run, “sales volumes remain lower than they were this time last year”. According to Hyett, there is an opportunity for several more months of sales increase because the Bank of England expects that the UK economy will be better than previously anticipated. He concluded by saying, “Whether shoppers find the confidence to return to the mid-market space though remains to be seen.”
US Market struggles to find its feet amid monetary tightening and banking moves
The abundance of data released on Friday, March 24, suggests that it is probable that the FTSE 100 will close the week with a loss overall, following an erratic trading session in the United States.
Markets across the world are still attempting to sort out the intense effects of the banking situations, and also the consequences of tightening monetary conditions for future earnings. Throughout the trading on Friday, the main indexes moved from gain to losses as Janet Yellen, Treasury Secretary, stated that authorities are ready to take measures, if required, to maintain stability for US banks. The next expected catalyst for market movements will be service data and manufacturing for the area later on.
Accenture cuts 19,000 jobs
Accenture cuts 19,000 jobs Reuters
As corporate clients have questioned their world’s economy’s strength, Accenture– a global service and consultant company- intends to lay off 19,000 workers.
Accenture is the latest in the industry to incite layoffs. This is a stern reversal for the consultant company, which over the last three years added to its workforce nearly 230,000 as it expanded its tech-advice capabilities with regard to strong demand. Other consulting firms like KPMG and McKinsey are also reducing their workforces.
Accenture’s layoffs, certainly, reflect the widespread redundancies across the tech sector. It’s, however, necessary to keep in mind that right-sizing workforces are different from right-skilling. There is a growing understanding that businesses in the process of reducing their employee base must be extremely careful to establish a balance between preventing growth from being stopped at the source and protecting the company in the short term.
Brent crude dips below GBP61 on Friday
In response to rumours that the US government will only be willing to replenish strategic oil reserves in 2023, at cheaper rates, the price of Brent crude fell under GBP61 per barrel.
There are indications that Russia’s supply is solid, which is further bringing down costs.
While this blip is notable, the international oil benchmark, overall, appears to be headed upward, supported by increased Chinese demand and expectations of looser monetary policy underpinning that.
