Mixing With The General Public On The Rise

Retail Sales
The Confederation of British Industry’s latest statistics show that retail sales expanded at their quickest rate in 18 months in May, indicating that consumers returned to the high street.

The CBI’s figures claim that retail sales climbed to 8% in May, based on a weighted balance, whereas in April they were minus 44%, which is the largest increase since December 2022.

The latest purchasing managers’ index indicated that GDP could expand by 0.3% in the second quarter of 2024. Inflation dropped to 2.3% in April from 3.2%, and down from its recent 42-year-high of 11.1%.

Inflation in the retail sector is now at its lowest since August 2020 and “prices are expected to continue to increase at only a slightly faster pace next month” according to the CBI.

Consumer optimism is also up to its highest point in more than two years, according to the GfK consumer confidence index.

Alpesh Paleja, lead economist at the CBI, said: “May’s increase in retail sales adds to the swathe of data pointing to an improvement in activity over the near-term.

“Falling inflation, and continuing real wage growth will contribute to a healthier consumer outlook, in turn supporting the retail sector further.”

It is thought that the increase in May retail sales is due to the milder weather in May compared to the heavy rainfall in April (and what feels like just about every other month since October). The CBI has said that retailers forecast sales to contract a little over the next month.

Paleja said: “Retailers are restrained about their business situation over the coming quarter. Headline sales are expected to fall moderately next month, and it’s concerning that retailers’ investment intentions have deteriorated noticeably.”

Online Sales
Meanwhile, on the internet, more shoppers than ever are ditching their baskets at the till. This is blamed on rising delivery fees and the resurgent high street (!).

Many shoppers are said to be dumping their online baskets mid-order. There was apparently a 9% increase in so-called “basket abandonment” last year, equivalent to around £3bn of lost sales.

In total, online retailers reportedly missed out on £34.4bn worth of sales in 2023. Shoppers cited high delivery costs, limited shipping options and the introduction of returns fees as the reasons for scrapping their order.

Figures collated by Retail Economics and GFS are only in their second year, but suggest this practice has been increasing sharply. Barclaycard reported in 2018 that online retailers were missing out on £18bn of lost sales. Online sales are reported to have risen around 79% since 2018, but basket abandonment rates are climbing more sharply and it is claimed have increased by 92%.

Richard Lim, chief executive at Retail Economics, says the current economic climate is partly to blame for more people deciding not to buy things they have put in their virtual baskets. The report found that much of the recent rise in basket abandonment has been among middle and high income millennials. According to the Retail Economics’ figures, people aged between 25 and 34 are over three times more likely to give up on baskets of clothes and shoes than those over 65. They are twice as likely to put furniture in their online baskets but not buy it as people aged between 55 and 64.

Many retailers have been increasing their minimum spends for free delivery. Others have increased costs outright. A wave of fashion stores have introduced returns fees, with the aim of stopping customers from over-ordering and returning clothes. While this appears to be helping clamp down on serial returners, there are signs it could be having a knock-on effect on their wider pool of shoppers.

Active customer numbers across the online fast fashion retailers including Asos and Boohoo have tumbled over the past year.