Retail sales record huge quarterly fall

UK retail sales recorded the highest quarterly fall since 2010 in the first quarter of 2017, according to official data.

The first three months of the year saw sales volumes reduced by 1.4%, compared to a 0.8% rise in the final quarter of 2016.

A fall of this magnitude has not been noted since the first quarter of 2010 and the data from the Office for National Statistics has led many economists to suggest that household spending is slowing.

The ONS has also said that the reduced retail sales will cut around 0.1 percentage points from the first quarter economic growth figures – the first time since the end of 2010 that the sector has provided a negative contribution to growth.

Household spending is viewed as a key driver of the economy but predicted activity can be difficult – while sales volumes were up by 1.7% in February, they contracted by 1.8% in March, worse than any forecast had expected.

Despite the drop, the sale of outdoor accessories, including garden furniture and sporting equipment, actually increased in March thanks to milder weather.

Managing stock to account for favourable weather conditions can be difficult for retailers, especially if they are faced with an unexpected surge in demand.

This highlights the need for businesses to have flexible payment solutions in order to manage their cash flows effectively.

Retailers that fail to adequately manage their outgoings could face bad debts and the threat of administration – although there are a range of solutions that can overcome such issues.

If a business is struggling to access finance, a number of alternative finance options also exist that might be able to support growth and recovery.

The British Retail Consortium’s sale index dropped to its lowest level for six years in mid-April, caused by a major dip in High Street spending.

Helen Dickenson, Chief Executive of the BRC, suggested that price pressure is putting a tighter squeeze on disposable income, which is reflected in the latest data.

By Phil Smith

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