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UK retail sector facing its worst run of health for five years

The KPMG/Ipsos Retail Think Tank (RTT) has warned that the retail sector in the UK is facing its “worst run of health for five years”.

After revealing that its Retail Health Index measure had fallen again in the second quarter, down from 82 to 81, RTT said it was likely to drop even further in the next quarter. If this happens, it would represent three consecutive quarters of negative performance, something which has not happened since 2012.

Despite the good weather in June boosting sales for some retailers, the RTT highlighted the squeeze on the sector from rising costs (wages and business rates), as well as margin pressure amid tough competition on the high street.  It added that the unstable economic and political situation was also chipping away at consumer confidence

“When looking at the retail sector over the past six months, the discounters and high-end retailers have delivered the best performance,” said KPMG head of retail Paul Martin.

“Prolonged discounting and crumbling demand have contributed significantly to the prediction that we are set for the worst run of retail health performance for five years.”

Tim Denison, head of retail intelligence at Ipsos, added: “Sluggish wage growth, dwindling savings and increased household debt will continue to restrict spending over the next quarter, with chatter regarding an interest rate rise and drop in house prices only adding to the strain on consumer confidence.”

 

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