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Retailers face a fine line between protecting margins and denting consumer confidence

Paul Martin, UK Head of Retail at KPMG, said:

"Retail sales continued to slide for the third month in a row, albeit down just 1% on what was a strong June 2021 and against a backdrop of unprecedented price rises on the high street. 

Online shopping continued to move in reverse with total sales down 9%  as non-food purchases related to the home, such as furniture, home appliances and computing, suffered the biggest falls in online spending.  The jubilee weekend, which saw street parties across the UK, provided some relief for food and drink retailers as sales grew by nearly 1.5% year on year, despite the rising cost across most items.

As the cost living crisis continues to deepen, retailers face walking a fine line between protecting margins and further denting consumer confidence by passing on price rises whilst negotiating with their suppliers to share the cost increases. Cost and efficiency will dominate retailers’ agendas as they are forced to make some tough decisions on which products make it to the shelves in order to remain price competitive for consumers.  With a long run of hot weather predicted and many consumers choosing to holiday at home this summer, retailers will be hoping that the feel-good factor begins to improve confidence amongst some shoppers – as presently overall confidence levels are lower than sales may suggest.”