UK consumer confidence dented
Growth slowing as shopper demand weakens
March 11 2003
UK retail sales grew by 1.3 per cent on a like-for-like basis, and by 3.9 per cent in total last month, according to the British Retail Consortium-KPMG Sales Monitor.
The three-month trend saw rates of growth decrease from 2.7 per cent in January to 2.5 per cent in February on a like-for-like basis, and from 5.4 per cent to 5.1 per cent overall.
Uncertainty about war and the economy seems to have dented consumer confidence, with weakened sales in many sectors. The overall impact of the London Congestion Charge was harder to judge due to factors such as the anti-war demonstration and the Central line underground closure.
Food and Drink sales were stable, clothing was mixed. It was been a slow month for electrical goodswith overall sales of DIY and furniture also disappointing. The mail order sector saw discounting as a result of poor sales.
In London, the closure of the Central line has started to impact on sales, along with the anti-war demonstration which took place on a Saturday, which is one of the busiest trading days of the week. Congestion charging appears to have had some impact on trade for those in and on the fringe of the zone, though the extent is difficult to quantify.
Bill Moyes, director general of the BRC, said: “The retail boom is clearly over. As these figures show, consumer sentiment is weak and the industry needs positive moves from the Chancellor to stimulate demand. We do not want sympathy; we want action. If the Chancellor doesn’t want the brakes applied to economic growth, the Budget must not inflate business costs or further weaken consumer demand.”
Bridget Rosewell, chief economic adviser to the BRC said: “The results for February are the weakest since the slowdown of 1999, once we exclude erratic changes caused by the changing month of Easter. They confirm the decision taken last month by the Bank to reduce interest rates and the need at this juncture to maintain confidence in the face of the geopolitical uncertainties that confront us. Although statistics suggest that a recovery has begun in the general economy, it would take very little to undermine this in the consumer area which is so crucial to economic growth, especially when the soon to be implemented rises in NICs are taken into account.”
Amanda Aldridge, head of retail at KPMG said: “Consumer spending has clearly slowed down this month with furniture, floor coverings and other “big ticket” items for the home particularly badly hit. Clothing sales have held up well overall with the colder weather boosting sales of outerwear and knitwear and strong product ranges keeping consumers shopping. Retailers are working hard to combat rising costs in their businesses as they plan for a further decline in consumer confidence.”
