Retail performance in the UK is expected to dip in the next quarter, according to independent experts Retail Health Index from the KPMG/RetailNext Think Tank (RTT).
And that is anticipated to be the turning point because, according to the RTT, a slowdown brought on by inflation “could take the industry up to three years to recover, based on historical parallels”.
Retail health maintained its resiliency in Q2 with an index score of 70, supported by higher-than-anticipated consumer demand, but by the end of September, look for that score to fall one point to 69.
Retailers and consumers are facing a “third wave” of disruption due to increasing interest rates, spiralling mortgage prices, and their impact on customers’ spending power, the research stated, as consumer confidence and the resilience observed in Q2 are starting to erode.
The current Q3 reading is the lowest since Q3 2020, when tiered restrictions were in place and Lockdown 2 was set to be enacted in the UK. Furthermore, it is 23 points lower than Q3 2008, which marked the onset of the Financial Crisis and the credit crunch.
According to additional information from RetailNext’s footfall index, which tracks billions of store visits annually throughout the globe, Q2 consumer traffic decreased by 5.2 percentage points from the prior quarter.
UK Head of Retail at KPMG and co-chair of the RTT, Paul Martin, said, “Looking ahead to the next 12 months we expect trading conditions for the retail sector to remain challenging.”
