The challenges faced by those in charge of maintaining and enhancing retail stores have been varied in recent months, including a shift away from town centres by wary shoppers after the riots in the wake of the Southport attacks. But overall, the outlook has been positive.
An economy emerging from recession with strong growth, inflation down, the first of what may be several base rate cuts and the end of political uncertainty with the election of a new government were all positives. This was reflected by consumer surveys, such as those carried out by GFK.
It had seen consumer confidence rising in each of its May, June and July surveys and at least holding steady in August. However, the September survey paints a much gloomier picture.
The index fell by seven points this month to -20, wiping out all the gains of the previous few months, taking sentiment back to the levels seen at the start of the year when the UK was still officially in recession.
Consumer insights director at GFK Neil Bellamy said: “Strong consumer confidence matters because it underpins economic growth and is a significant driver of shoppers’ willingness to spend.”
For this reason, he said, there was much to be concerned about as the government has signalled a grim Budget this autumn, which consumers are “nervously awaiting”.
In its election manifesto, the Labour Party said it would not raise income tax, VAT or national insurance. If it decides it cannot keep these promises – a politically risky move even for a new government with a landslide majority – consumers may feel the pinch and be even more reluctant to spend, something that could be very hard for retailers as Christmas approaches.
Of course, this may not last; it could be the Budget will not be as bad as expected. Interest rates may be cut again soon (although the rate was held this month), and the expected uptick in inflation prompted partly by higher energy prices should not persist, as energy supplies are in a far better place than they were in 2022.
This means the retail sector may be in for a tougher autumn, but not necessarily a bad long-term outlook.
