Volume down, value up

A couple of months ago I commented that I had visited a major shopping centre and had seen very little evidence of any slowdown in retail activity or consumer confidence, despite ominous predictions of economic hardship in the news.

This was just a casual observation, but the shops were full of people and the precinct was bustling.

However, it would seem that consumers are finally starting to put the brakes on their post pandemic spending as the hike in energy, fuel and food prices finally starts to sink in. According to the British Retail Consortium (BRC), sales – both in-store and online – fell for the second month in a row in May.

Year on year, retail sales have declined by 1.1%, which may not sound like a lot, but the BRC points out that a small drop in total sales masks a much larger drop in the volume of goods sold, once inflation is accounted for.

This decline in consumer confidence is echoed in the latest Business Pilot Barometer, that reveals sales have fallen by 46% from March to May. Leads are also down 29% over the same period.

On the plus side, the Barometer also shows a remarkable hike in average order values, up 11% in May and 55% year on year.

That is significant as it could underline the forecasted reduction in demand for commodity or single product purchases such as a new front door and reinforce the outlook of a much more resilient ‘premium’ market – as well as demand from homeowners looking to invest in more comprehensive energy efficient solutions.