PwC comments on March's ONS retail sales figures

Commenting on the Office of National Statistics Retail sales figures for March 2022

Lisa Hooker, consumer markets leader at PwC, said:

“Given the cost of living crisis - as inflation hits 7% and our own analysis suggesting the average UK household will be £900 worse off this year - it is not surprising that we saw an acceleration in the month on month decline in retail sales volumes in March to 1.4%. However, retail sales are still around 10% higher than before the pandemic, with shoppers prepared to dip into savings as they restocked their wardrobe, refreshed their beauty routine as they returned to the office and social engagements, and continued to invest in their homes. The desire for more formal clothing was particularly apparent in men’s wear.

"However, not all categories performed strongly, with food sales falling given the later Easter and as we returned to eating and drinking out, particularly as the weather improved. We also reigned back expenditure on big ticket items such as household appliances and electronics, reflecting not just falling consumer confidence, but also the comparison to strong sales through lockdown as we diverted spending to the home and home working.

"March saw another gradual improvement to footfall levels across the UK. As the first full month without Covid restrictions in England and Northern Ireland, consumers returned to stores helped  by some spring sunshine. This resulted in a decline in online sales for the second month with online sales volumes down 7.9% versus February with penetration at 26% versus a peak of 37% in February 2021. Whilst we do not expect online penetration to fall back to pre-pandemic levels of 20% seen in February 2020, it suggests that consumers want to return to their high street.

"Whilst we believe there will continue to be pent up demand for certain categories as we plan for summer and a return to holidays, the squeeze on incomes will impact spending.  We are already seeing consumers adopt coping mechanisms to deal with the squeeze in incomes such as seeking value and trading down.  The discount and second hand sector was one of the stronger performing segments across March.  We have also seen more resilience in spending across the older age groups, maybe reflecting that they were less impacted through lockdown in terms of finances but also are likely to be helping out their families.

"Given the latest view that inflation will stay high across the year and into 2023, we do expect further tightening of belts and have fears some of the recovery in sectors such as fashion, health and beauty, and sport and outdoors may falter in coming weeks with retailers having to work hard to win consumers share of wallet.”