Conditions for retailers likely to remain tricky despite rising sales volumes


Data released by the Office for National Statistics showed that retail sales volumes increased by 1.2% in April, the strongest monthly increase since November 2014. The increase in activity seen over the past 12 months means that sales volumes in April were 4.7% higher than a year ago.

Consumers appear to have hit the high street despite the gloom of uncertainty surrounding the outcome to the general election in May. Sales of clothing, footwear and textiles jumped 5.2% between April and March, the largest rise in four years.

Consumers are widely expected to be the key driver of economic growth this year. The sharp fall in inflation over the past year to -0.1% in April has provided a significant boost to real wage growth, with workers experiencing the strongest real increase in earnings since October 2007 on the latest data. Additionally, the £600 increase in the income tax free personal allowance in April means the average worker will have an additional £2 a week to spend over the coming fiscal year.

Whilst this will be good news for the economy as a whole, retailers may not reap the full rewards of another spending spree. With consumers having seen real incomes declining in recent years, they have become more adept at waiting for a bargain. This trend seems unlikely to change dramatically over the coming year as intensifying competition across the high-street means retailers are going to struggle to win the game of cat and mouse between themselves and value-driven consumers.