The Real Test For Retailers Will Be Christmas

Rajeev Shaunak is head of consumer at MHA, the accountancy and advisory firm.

September’s retail sales figures which were worse than forecast suggest consumer demand is far from robust. After a stronger-than-expected summer, a drop of this size is not entirely surprising, particularly as many households continue to balance higher living costs against discretionary spending as shown by the GfK numbers released overnight.

What we are seeing is not consumers stopping spending altogether but becoming increasingly selective about where and how they spend. Value, convenience and promotional activity continue to play an important role in purchasing decisions.

Looking ahead, Black Friday will provide a clearer indication of underlying consumer confidence than September’s figures alone. Retailers using measured promotions to drive volume will be encouraged. However, widespread discounting on new-season stock could indicate demand is softer than many businesses are hoping.

The sector’s real test remains the Christmas trading period. Consumers are still willing to spend, but retailers will need to work harder than ever to demonstrate value and differentiate themselves in an increasingly competitive market.

As retailers look towards the Autumn Budget, many will be hoping for measures that support household disposable incomes and consumer confidence, which ultimately remain the key drivers of sustainable growth across the sector.