UK Retail spending rose this month, but at what cost?

UK Retail spending rose this month, but at what cost?

May has been a positive month, a feel good month - with glorious sunshine, a couple of unseasonably warm bank holidays and even a Royal Wedding. Bank holidays, good weather and national celebrations all generally translate to money being spent and signal increases in retail revenues and this year was no exception.

In fact according to the British Retail Consortium (BRC) this May retailers experienced the fastest growth in four years - with total sales in the UK rising by 4.1% compared to last year. Fabulous news and quite frankly we, the retail industry, really needed the boost. Predictably when one of the main triggers was the good weather the two retail categories that saw the biggest uplift were garden furniture and summer fashion ranges (fortunately as both suffered with the earlier bad weather, how quickly the sun makes us forget that the snowy Beast from the East was still lingering in April!).

As you know here at Mallzee Insights we love data, facts and figures, what we love even more is delving deeper and analysing the headlines and trends from different angles.

So we know which feel good triggers were causing the increased spending in May, but what does this increased spend mean for retailers, how will it have impacted their bottom lines?

To delve deeper we looked at the current levels of discounting across high street fashion. In May 2018 the number of products on sale at a discounted price was almost 50%. Just think about that for a minute… almost half of all clothes, shoes and accessories were offered at a discount and not just a few pence, the average discount amount in May 2018 was almost 42%.

So while overall consumer spending might have been up and clothing was one of the main categories to benefit from this increased spend, profits were still being squeezed.

To put the levels of discounting in context; the volume of products discounted this May was almost double that of last May, at 48.6% compared to 28.9% and 22.6% in May 2016. The average discount level is also rising year on year, 41.9% this year compared to 40.5% in May 2017 and 39.6% in May 2016

How can retailers ensure they get maximum benefit from any increase in consumer spending?

The obvious and most efficient way is to reduce stock in product lines that are bound for the sales rail dragging profits down with them, whilst ensuring that there are plenty of the best selling products available when your customers are looking to spend.

But that’s the holy grail?

Mallzee Insights helps retailers improve full price sell through via product testing - want to know more then drop us an email brands@mallzee.com

Cally Russell

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