Retail & Leisure News - 12 June, 2017
Consumer spending slowed in May, resulting in LFLs declining 0.4% and total sales growth rising 0.2% YoY, according to the BRC. Following the strong growth seen in April, a result of the late Easter, May’s result is perhaps more indicative of the prevailing state of the UK retail market. The polarisation between food and non-food sales continues - three-month average food sales increased 4.3% in May YoY, while quarterly average non-food sales were almost flat at 0.1%. Recent figures from Visa and Barclaycard paint a similar picture. Visa recorded the first fall in consumer spending in nearly four years, down 0.8% in May YoY. Barclaycard, meanwhile, noted a continuation of the trend towards experience-led expenditure, with entertainment spend up 12% in May, compared with clothing, which was down 2.9%.
The slowdown in sales is indicative of increasingly constrained household spending power, as consumers are starting to feel the effects of ongoing political uncertainty, stagnating wage growth and rising inflation, which reached 2.7% in May, its highest level since September 2013. With further declines in the value of the pound recorded following the General Election last week, a sustained period of inflation now appears more likely. However, a lower value of the pound could bring a further boost to tourist spending, benefitting certain sectors of the retail and hospitality industry.
Chris Ireland, CEO, JLL UK commented on the General Election results: “The UK has faced political uncertainty in recent history and, notwithstanding the dramas that immediately followed the Brexit vote, the UK economy and property market remained very resilient. Investors in real estate look over the medium to long term. The result suggests that the hard Brexit that many were assuming would now definitely occur looks somewhat less likely. That could be a longer term positive for the UK market.”
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Director, Head of Retail Research (UK & EMEA)
+44 (0)20 3147 1155
Director, Head of UK Retail & Leisure
+44 (0)20 7318 7838