The health of Britain’s retail industry fell during the second quarter of 2017 and is expected to drop further during the third quarter of the year, marking three consecutive periods of decline, according to a leading think tank.
The KPMG/Ipsos Retail Think Tank recorded a Retail Health Index of 82 for the first quarter of the year, but this dropped to 81 for the second quarter of the year. The index base of 100 was set on 1 April 2006.
The think tank warned that these figures would lead to the sector facing its “worst run of health for five years”, with three successive quarters of decline not experienced since 2012. The fall comes as a result of pressure on margins, high street competition and rising costs, including business rates and wage increases.
While June was a strong month for the high street, with footfall up thanks to the sunny weather, the report described this as “too little, too late to save the quarter.”
The unstable economy and political uncertainty were blamed for low levels in consumer confidence, which impacted the results, as did the fact that many retailers’ currency hedging is coming to an end following the Brexit vote last year.
Commenting on the findings, Paul Martin, head of retail at KPMG UK, said: “When looking at the retail sector over the past six months, the discounters and high-end retailers have delivered the best performance. Prolonged discounting and crumbling demand have contributed significantly to the prediction that we are set for the worst run of retail health performance for five years.”