New research shows the “deteriorating” state of the retail industry, after the retail health index (RHI) score fell “more than expected” during the second quarter of 2019.
The latest report from the KPMG/Ipsos Retail Think Tank (RTT) suggests that low consumer demand, margin pressure and the cooler weather are all to blame for “weighing down” the sector. Every quarter, each member of the RTT makes quantitative assessments of the impact on retail health of demand, margins and costs for the quarter just completed and a forecast of the quarter ahead
For the second quarter of 2019, it was down from 77 to 76 – the same score as the “double-dip” recession in 2012. This marks the 13th consecutive quarter that health either declined or remained flat, and means that retail health has not improved since the beginning of 2016.
The RTT suggests the outlook is not set to improve in the third quarter: “There is little hope of improvement ahead, with the RTT predicting that health will decline a further point in the third quarter, bringing the RHI score to an all-time low of 75.”
It lists a possible recession, Brexit and consumer uncertainty, among key concerns for the industry.
RTT member James Sawley, head of retail and leisure at HSBC, added: “There’s no denying that [retailers] are facing some of the toughest trading conditions they’ve ever experienced.
“Trading is challenging on the high street and online – and apparel is very much on the forefront of this battle.
“There are a number of issues impacting consumer confidence, and retailers’ margins are under significant pressure. Online sales growth was recorded at just 5% for the last few months, so it’s not just the high street experiencing the strain.”
Fellow RTT member Mike Watkins, Nielsen’s head of retailer and business insight, concluded: “Consumers should be feeling more confident in light of wage growth and low unemployment, but they are notably clawing back spend.
“Retail as a whole faces some structural issues that may be amplified as we near the next Brexit deadline in October.”