Bumpy times ahead despite sales boost, forecasts retail advisor

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Knight: bumpy times ahead

Barry Knight, head of retail at Grant Thornton UK, remains cautious about retail trading despite the recent boost in sales, which was lifted by the warm weather, Easter and extended Bank Holidays.

“Many retail groups have issued profit warnings and disappointing trading updates over the last few months, and as such, the level of the increase in sales reported across the industry today will come as a surprise to many,” he said.

“The warm weather, late Easter and the Royal Wedding have provided a much-needed upswing in the sales figures. However, that may just be a short-term boost.

“I would express a word of caution about these figures as I don’t think they tell the full story of the state of the retail sector’s health. If you dissect the figures, I believe the warm weather, which has driven sales of fashion, garden, and outdoor goods to name a few, has kept sales flat at best in real terms. With inflation running at around 4.5%, and the royal wedding accounting for an uplift of 2% – ie 6.5% – the reported number of 6.2%, seasonally adjusted, in real terms could be negative by 0.3%.

“Leaving aside the supermarkets which continue to trade satisfactorily, we are hearing from retailers on the ground across pretty much every single sub-sector that underlying trade is still weak. In many cases we are even starting to see online sales being affected due to weakening consumer demand.

“There are still bumpy times to come and I believe conditions will get worse before they get better. Retailers will have to do what they can to ride through to recovery by adapting their strategies to suit customer demand and focussing on the product lines that are doing well while managing working capital, in particular stock levels. There is likely to be more misery to come on the high street,” Knight said.