One of the UK’s largest retail bodies has warned that retailers could suffer in the next few months during the run-up to Christmas, due to a lack of consumer confidence in the economy.
Confidence slumped in September, with an increasing number of Brits saying they expected the UK economy to get worse over the next three months and would adjust their purchases down, according to the British Retail Consortium (BRC).
A third of consumers said they expected to spend less on clothes over the next three months, and around a quarter expected to spend less on electronics, beauty, and entertainment.
Over a quarter expected to spend more on groceries.
“Retailers could face a turbulent few months as consumer confidence fell significantly in September,” Helen Dickinson, chief executive of the BRC, said.
“Negative publicity surrounding the state of the UK’s finances appears to have damaged confidence in the economic outlook, particularly among older generations,” Dickinson added.
According to GfK’s consumer confidence measure, sentiment plummeted to -20 from -13 in August, the lowest level since March.
Fewer respondents to GfK’s survey felt positive about their own financial position in September compared to August, and many reported being less likely to make large purchases.
Budget a ‘key opportunity to inject confidence’
Dickinson again called on the government to foster investment into retail business by reforming business rates.
“By introducing a Retail Rates Corrector – a 20 per cent adjustment to retail property rates bills – the Chancellor could help drive investment in local high streets and communities, creating jobs and boosting consumer confidence,” Dickinson said.
The Confederation of British Industry (CBI) similarly called for the government to fix the “antiquated” business rates system earlier this month, in order to boost productivity and growth.
The Government have pledged to reform business rates, and to “level the playing field” for high streets. Policies details are expected in the budget.
Most retailers use the so-called ‘golden quarter’, the three months running up to Christmas and New Year, to cash in, as Brits spend on big-purchases.