Retail figures highlight impact of inflation

Christian Spence, Research Manager at Greater Manchester Chamber of Commerce, said: “The April 2013 retail sales statistics show that volumes have increased by 0.5% on a year ago whilst values have increased by 1.3%, highlighting the impact of inflation on people’s purchasing ability. Food sales have been particularly weak, doubtless driven by the high level of domestic food inflation over the past several months caused by poor harvests in the UK after last year’s inclement weather. Whilst the amount spent in the food sector fell by just 0.2%, the quantity of food bought fell by 3.8%, the largest contraction for nearly two years, leaving the amount of food bought in the UK now at the same level as in December 2003.

“The continued rise of internet sales is an important part of the picture. Up over 13% in the past twelve months, one pound in every ten spent in the UK last month was online, with even online food sales rising nearly six per cent. This shift of the retailing world to online is unstoppable, and its effect on the high street clear. The percentage of empty shops is almost identical to the amount of internet sales and this is likely to continue. The focus of our local authorities needs to move from trying to stop the inevitable online trend to openly discussing innovative ways of using large volumes of retail space which are unlikely ever to return to their recent use.

“It is the smallest retailers – those employing fewer than 10 people – that have borne the brunt of reducing sales volumes. Small companies employing between 10 and 100 performed the best in the past year, increasing sales by around 14% with the largest stores holding relatively level. It is in those smallest businesses that fixed costs such as high rents and the interminable rise in businesses rates have the greatest and most disproportionate burden, and there is more that both local and national governments can do to actively help these smallest businesses. They hold the greatest potential for employment growth, but are being constrained by poor policy decisions.”