High street suffers record fall in sales in March

Oh dear. Last month saw the biggest drop in retail sales since records began in 1995. And there's no blaming the snow this time.

by Emma Haslett
Last Updated: 06 Nov 2012
Looks like all those (profit) warnings emanating from the high street weren't exaggerated: new figures from the British Retail Consortium show that retail sales in March were 1.9% down on than the same month last year (when there was a 6.6% rise). That's the biggest drop since records began in 1995, which can’t just be because Easter falls so much later this year. Retailers will now be desperately hoping that the forthcoming bank holidays - and the Royal Wedding - can provide a much-needed boost. Anyone for an Easter egg in the shape of Kate Middleton's head?

According to the BRC, clothes retailers were among the worst performers, suffering their biggest decline since 2009 (the biggest fallers being men’s and children’s clothes – a sign that even when cash is tight, women don’t let their standards slip). Big-ticket items, such as sofas, washing machines and fridges were also hit hard – although the BRC did point out that the iPad 2 (which, at £399, is definitely big-ticket) bucked that particular trend. Food sales were also down on that previous year, but that could have something to do with the timing of Easter.

However, BRC chief Stephen Robertson reckons a slump like this goes ‘way beyond anything that can be explained by [Easter] alone’. According to Robertson, it’s more likely down to a combination of high inflation and low wage growth, with household budgets being squeezed by mounting fuel and utility costs, higher VAT and so on. You know the drill by now.

One effect of the squeeze in spending was the return of the ‘lipstick effect’: the idea that when faced with constrained budgets, people turn to cheaper treats, like lipstick, to cheer themselves up. The same phenomenon occurred during the recession, the great Depression and post-9/11 – but what's good for cosmetic manufacturers may be bad for the high street as a whole.

Nonetheless, retailers say they have high hopes that the two imminent long weekends can help give sales a leg-up – not to mention the tourists expected to flood the country in anticipation of the royal wedding. We don't know about you, but we're already stocking up on china plates of the happy couple.

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