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Retail sales to grow slowly in 2015

Retail sales are likely to grow by 2% at most in 2015 as consumer confidence remains fragile ahead of the general election and anticipated interest rate rises, the KPMG/Ipsos Retail Think Tank has warned.

The panel of experts said concerns around the outcome of the election, coupled with a later-than-expected Budget on March 18, could cause consumers to pause their spending while they wait for greater clarity. A possible rise in interest rates and VAT could also constrain their ability to spend.

“The outcome of the election seems likely at this stage to be messy and inconclusive, which will do little to help consumer confidence,” said independent retail analyst Nick Bubb, who sits on the think tank.

The panel warned 2015 will be an “incredibly expensive year” for retailers as ever-increasing online orders inflate the overall ‘cost-to-serve’. Unless retailers achieve decent sales growth, this will impact profits over the next 12 months.

David McCorquodale, head of retail at KPMG, said: “2015 will see some growth, but retailers will do well to break through the 2% barrier.  There are multiple factors which could knock sales off course, including concern around the general election and an interest rate rise. There is undoubtedly growth coming through online sales, but this is a double-edged sword.  Online sales have a higher cost-to-serve, putting even more pressure on retailers’ margins.”

Readers' comments (1)

  • Good points and especially interesting about online. There are still retailers out there with the 'market trader mentality' who are prepared to work on 1.2 margin online an expect brands to accept that and make a profit.

    They cannot and don't deserve to survive.

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