Following the recession, consumer confidence in the UK remained extremely subdued and as a result retailers continued to report falling sales, dropping profits and store closures. However, the situation has gradually improved in many sectors of the retail industry, with consumer confidence now at a four year high according to new data collected by Deloitte.
Deloitte’s latest consumer tracker report shows that, in the three months to September, consumers had a more positive outlook on their finances than at any time since 2011. In part, this was due to an enhanced feeling of security, as record employment and the strongest wage growth seen in quite some time left consumers more confident about spending their disposable income.
Furthermore, claims Deloitte chief economist Ian Stewart, this situation is set to last as, according to the consumer prices index, inflation dipped back into negative territory during September. For consumers, this means a continuation of the low prices seen earlier in the year and a heightened ability to borrow in the short term without worrying about elevated interest payments.
Mr Stewart says; “For consumers the good news on rising real wages and improving job security trump the bad news from the global economy.
“Our polling reveals that consumers are saving less now than at any time in the last five years and that borrowing has risen through this year.
“Rising real incomes, more borrowing and lower levels of saving give UK consumers the wherewithal to keep spending – household expenditure is set to remain the engine of UK growth over the next year.”
Deloitte’s study was backed up by new figures from the British Retail Consortium (BRC) and KPMG. According to the partnership’s Retail Sales Monitor, sales grew by 2.6 per cent on a like for like basis when compared to those from the same period in 2014, which, excluding Easter distortions, marked the fastest growth since January 2014.
In real terms, this should give retailers currently embarking upon expansion programmes a boost in confidence as, thanks to the growing prominence of the leisure sector in regional retail destinations, recent trends indicate that consumers are now more willing to spend their disposable income on prolonged visits to shopping centres. Deloitte’s study, whilst not claiming to predict the future, indicates that the buoyant feeling in the consumer sphere at present will continue to grow as the year progresses and the economy strengthens further.
BRC chief executive officer Helen Dickinson says; “September was a bright month for retail, with the strongest sales performance since January of last year, excluding Easter distortions.
“Food had, in real terms, its highest twelve month average sales since February of 2011, which is particularly positive news following a prolonged period of decline.
“Retailers are seeing some improved consumer demand but they continue to operate in a very competitive environment – they are looking to Government to lighten the excessive tax burden they face.”