Inflation is set to add £18.2 billion to UK non-food retail sales this year, a report suggests.
Sales values are expected to hit £249 billion in 2023, but the 2.6 per cent increase – or an additional £18.2 billion of spending on last year – will be driven entirely by rising consumer prices, according to the Ecommerce Delivery Benchmark Report by Auctane and the consultancy Retail Economics.
A survey for the study of more than 730 retail businesses across eight international markets found that 80 per cent of retailers are planning to increase the price of products, with 40 per cent suggesting rising costs will be their biggest challenge this year.
Some two thirds of UK consumers (66 per cent ) say inflation is their biggest concern, Retail Economics found.
Some 74 per cent plan to change their buying behaviour, with 34 per cent saying they would only make necessary purchases while 29 per cent intend to delay or reduce spending.
As a result, UK retail sales volumes are set to fall by 4.9 per cent on last year due to shoppers having to spend more to get less for their money, with retail inflation expected to hit 7.5 per cent over the year ahead.
The study also found that more than a quarter of retail firms plan to increase the cost of delivery for their customers, while just 18 per cent said they would not increase the price of products, delivery, or returns this year.
Almost 30 per cent of UK consumers said they would “happily” switch to parcel lockers or click and collect services for their online orders.
Retail Economics chief executive Richard Lim said: “Retailers will continue to face a toxic mix of pressures this year as rising input and operating costs collide against a backdrop of weaker consumer demand, rising interest rates and shifting consumer behaviours.
“These conditions favour those retailers who have strong balance sheets who can invest heavily in price, leverage data to target their most valued customers and win new ones, while efficiently utilising stores to provide a truly omnichannel proposition.
“Those that carry high levels of debt, have weak pricing power and sit in the middle of the market could find life very difficult.”
Josie Clarke – Press Association