Sophie Michael, Head of Retail at BDO, looks at March’s high street sales figures and sees retailers struggling to convert footfall into sales.
It’s been another tough month for the UK high street with sales flat-lining in March despite warmer weather and Mother’s day seeing footfall up three out of four weeks.
High Street Sales Tracker
According to our monthly High Street Sales Tracker (HSST), UK retailers have failed to grow sales for the fourth month in a row, with like-for-like sales flat (0%).
The lifestyle sector grew 1.4% year-on-year, with Mother’s Day acting as the main driver for growth. Homewares also benefited, with sales up 1.8% year-on-year, although growth is beginning to slow.
Year-on-year fashion sales are again disappointing, having dropped -0.8% in March from -2.5% in the same period last year. However, the sector actually performed better than previous months. In February, like-for-like sales declined -3.4% (the poorest result for the sector since September 2016).
While retailers struggled to convert buoyant footfall into bricks-and-mortar sales, they did fare better online with non-store sales up by +28.1% – the highest monthly result seen since January 2015 (+37.8).
Retailers will be feeling disappointed, though. The new season should have triggered high street spending, and retailers will be questioning why they have been unable to convert shoppers into buyers.
A backdrop of economic uncertainties
As inflation starts to be felt against a backdrop of economic uncertainties, it is ever more important that retailers focus on product, quality and range. With a tightening consumer purse, shoppers will become increasingly choosy about how they spend their pound. Retailers have clearly got a challenge ahead of them and will have to go the extra mile to differentiate their products and stores.
But there is a role for policymakers too. It’s clear the high street is under pressure and now is the time to relook at the vexed question of business rates on the high street.
According to the British Retail Association, in England, the retail industry currently contributes £7.3 billion of rates annually – nearly one-quarter of all receipts – far more than any other sector.
What we are calling for
There are two steps that the Government could consider. Firstly, change the revaluation period of business rates to every three years (currently five) to ensure that rates bills reflect changes in the property market and the wider economy. Secondly, take investments made by businesses out of the calculation for valuing properties rather than improvements adding to rateable values.
Sophie Michael is Partner and Head of Retail and Wholesale at BDO.