British retailers optimistic

12 April 2011

LONDON: UK consumer sentiment remains weak but retail sales could experience a "spring bounce" due to the upcoming royal wedding, according to analysis from BDO.

The professional services firm said that sales in non-food stores fell by 1.2% year-on-year in March, reflecting shoppers' concerns over unemployment and the strength of Britain's economic recovery.

Homeware was the worst-performing category, off 2.7%, while fashion had a small rise of 0.8% from March 2010.

UK GDP experienced a shock contraction of 0.5% in the final quarter of last year, as unusually cold weather dented consumer and corporate spending during the festive period.

Government cutbacks aimed at reducing the fiscal deficit will also lead to widespread job losses in the public sector this year.

But BDO pointed out that April's retail sales are likely to show an improvement from the previous year, due to a combination of seasonal factors and the marriage of Prince William to Kate Middleton on April 29th.

"Combine Bank Holidays, Easter and the Royal Wedding with some good weather, and the UK consumer's inclination to shop will be hard to suppress," Don Williams, BDO's head of retail and wholesale, said.

In its report, BDO also recommended that retailers take advantage of shifting media use, and increase their e-commerce initiatives.

"Consumers want convenience, and that increasingly means the ability to conduct transactions through smartphones as well as the internet," Williams added.

According to the latest monthly figures, sales made via online channels were 48% up on March 2010.

This trend has remained consistent over the last few months, with a 49% growth rate for online retail recorded for January.

Data sourced from BDO; additional content by Warc staff