Struggling retailers in the UK are compelled to drastically reduce prices in an effort to stimulate business activity. Unfavourable summer weather coupled with escalating interest rates have converged to dampen consumer spending in July.
The joint monthly analysis conducted by the British Retail Consortium and KPMG, scrutinising spending behaviour both on the high street and online, unveiled a significant year-on-year decline in sales volume. Additionally, an increasing number of retailers are resorting to promotional offers to entice cautious consumers who are hesitant to part with their funds.
Barclays' separate study revealed that consumer sensitivity to "shrinkflation" - the practice of reducing product sizes while maintaining or increasing prices - has now extended to encompass alcoholic beverages. Over one in five consumers (22%) reported encountering "drinkflation," where alcoholic drinks, including beers, spirits, and canned cocktails, contained reduced alcohol content.
Both the BRC/KPMG and Barclays' monthly reports indicated a modest uptick in spending value for July, but this increase was offset once accounting for the current inflation rate of 7.9%. BRC/KPMG noted that the value of sales last month was 1.5% higher than July 2022, while Barclays highlighted a 4% rise in consumer spending through credit and debit cards compared to a year ago.