The UK retail market has been hindered by slumping consumer confidence, stemming from inflation and stagnant wages. Still, total retail sales will increase 2.9% this year, reaching £427.67 billion ($577.23 billion), eMarketer expects. Retail sales growth will slow throughout the forecast.
According to eMarketer’s latest report, “UK Retail and Ecommerce: Economic, Sales and Buyer Trends for 2016-2021,” inflation’s impact on retail sales in the UK was evident during the 2016 holiday season. (Subscribers to eMarketer PRO can access the report here. Nonsubscribers can purchase the report here.)
According to the Office for National Statistics (ONS) – UK, Great Britain’s sales volume in December declined 1.9%—the biggest sales drop since April 2012, when a record amount of rainfall kept consumers from retail stores. While retail sales for Q4 2016 were up 5.6% over the same period in 2015, the number of products purchased during November and December fell.
Slowing spending and growing ecommerce activity has hit UK retail stores hard. According to PricewaterhouseCoopers (PwC) and The Local Data Company (LDC), approximately 896 stores closed from Great Britain’s town centers in 2016. This trend looks to continue: The research found that store closures averaged 15 per day, while openings averaged 12 per day.
According to ONS data for June 2017, stores in Great Britain that predominantly sell food saw year-over-year sales volume contract 0.4%, while the sales volume in nonfood stores grew 3.3%. As the UK’s economic woes continue, consumers are beginning to focus on essential purchases.
Based on larger-than-expected ecommerce sales, initial buoyant consumer confidence despite Brexit and, in part, inflation, eMarketer has raised its estimates for UK retail and retail ecommerce sales in 2017.