EY comments on today’s ONS retail sales figures for May
Silvia Rindone, EY UK&I Retail Lead comments:
“While UK retail sales continued to see marginal growth in May, with a month-on-month rise of 0.3%, it was the lowest level of growth seen in the last six months, as the slew of bank holidays failed to boost sales as expected.
“The increasing divergence between retail sales values and sales volumes continued in May as price increases impacted the amount of goods UK consumers took home.
There was some positive news for online retail sales though, as the warmer weather saw non-store retailing sales volumes increase by 2.7% in May. with consumers turning to online channels to update their summer wardrobe and purchase outdoor-related goods.
“Despite this, food manufacturers reported the first drop in production costs since 2016. Lower energy prices and a fall in shipping costs have, for now, outweighed wage bills which have risen at their fastest rate in over three decades for a fifth quarter in a row.
“It may still be some time before consumers see this benefit on the shelves though, as food price inflation was at its highest since 1977 in April. Affordability, remains is at the top of consumers’ minds. EY’s latest UK Future Consumer Index report found that 43% of consumers state it as a key decision when making a purchase. Consumers also continue to be more open to private label, with 80% willing to buy private label packaged food.
“As shoppers continue to make more considered decisions on where they spending their money, retailers need to work hard to better understand the factors influencing buying behaviour by re-evaluating ranges and pricing strategies. While a challenging process, those early adopters are now seeing an increase in market share – it’s now time for everyone else to be doing the same if they want to see the same returns.”