The high street has suffered its sharpest drop in sales since the credit crunch as retailers battle erratic weather, increasing competition from online rivals and jittery consumer confidence.
Like-for-like sales fell by 6.1 per cent in April compared with the same month last year, according to BDO’s latest monthly tracker, published this morning. The accountancy firm said this was the worst overall figure since November 2008. Fashion retailers in particular posted a 9.2 per cent drop in sales, the sharpest fall since the financial crisis.
The gloomy figures come just two days after high street bellwether Next issued its second warning of declining sales this year, blaming recent storms and cold weather for keeping shoppers away.
Its chief executive Lord Wolfson lowered his guidance for the year and sounded the alarm bell for other fashion retailers on the high street by warning of “weaker underlying demand for clothing and a potentially wider slow-down in consumer spending”.
Fellow retailers Bonmarche, Marks & Spencer and even high street darling Primark have also issued downbeat trading statements in recent weeks, depressing many share prices across the sector.
Consumer sentiment nosedived to a 15-month low in April, market research firm GfK said last week.
“The high street is a tough environment right now,” said Jon Copestake, chief retail & consumer goods analyst at the Economist Intelligence Unit. “Not only is the structural switch to online retail pressuring bricks and mortar sales, but we are also in a fiercely competitive environment with discounters and pound shops tapping into a continued price sensitivity among consumers.
"This has been exacerbated by low prices which have fuelled price wars between retailers in a bid to win over customers.”
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Ian Geddes, head of retail at Deloitte, told City A.M.: “There are a number of things happening on the high street that are making things difficult for retailers. We have already had the weather making it quite tough and we have also seen a shift to spending on leisure. Consumers are spending more on experiences such as eating out. That means that we are getting more dramatic peaks in shopping.”
Other segments of the retail sector have held up better than clothing, however. BDO found that homeware sales recorded a modest 0.2 per cent fall in April. And it is hoped this month will bring better news for the sector. The CBI’s latest distributive trade survey suggests a pick-up in May, with 117 retailers – a balance of nine per cent – stating that they expected sales to be stronger.