Retail consultant urges caution, despite recent rebound in UK

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Emmanuel Hembert, principal at global strategy consultancy AT Kearney, said he was surprised at the pick-up in retail sales in March 2011 but urged caution.

“Optimism over UK retail must be moderated,” he said. “We believe the uplift is linked to specific sectors and circumstances – notably the impact of the Royal wedding and unseasonably good weather driving up DIY sales.

“With regards to the pick-up in food sales, we mustn’t overlook the fact the generally weak recent results displayed by supermarkets is evidence of a general downward trend. 2011 is the year where consumers are really squeezed and we are seeing a real change in spending patterns. Inflation, public spending cuts and tax increases are contributing to the squeeze on household spend.

“Moreover, a bigger squeeze will come in the case of increased interest rates. In 2010, mortgage interest payments by consumers amounted to £57bn with historically low rates which is bigger than the entire spend on clothing and accessories (£47bn). This illustrates the impact an increase in rates can have on consumer wallets and should temper the optimism the March figures seem to have engendered.”