UK retail sales rise 1.8% in March but fail to offset 2024 dip

Total retail sales in discretionary spend categories grew by 1.8 per cent in March, falling short of offsetting a negative base of 2.2 per cent recorded in the same month in 2024, according to BDO’s latest High Street Sales Tracker.

“It’s no surprise that consumers might be reluctant to spend in discretionary categories when there is so much uncertainty around, including reported potential job cuts from employers struggling to bear the cost of National Insurance changes, personal household bills increasing and now the impact of trade tariffs on the economy,” Sophie Michael, head of Retail and Wholesale at BDO, commented.

Retailers were unable to drive any significant growth in consumer spending in stores last month. In-store sales rose by just 0.3 per cent, compared to a negative base of 1.8 per cent in March 2024. This marginal increase remains well below the rate of inflation, implying that actual sales volumes contracted compared to the same period last year, as per the latest report from BDO.

“As reduced consumer spending squeezes their revenues, retailers are also facing higher cost bases, with changes to National Insurance, increases to the National Living Wage and higher business rates coming this month. There are distractions and challenges at every turn, but retailers must focus on what really matters to their bottom line,” suggested Sophie.

The lifestyle and homewares sectors were hit particularly hard, with in-store sales declining by 0.7 per cent and 2.8 per cent respectively, year-on-year.

This weak performance mirrors widespread negative economic sentiment among consumers. With many households facing higher energy and water bills and council tax from April, spending remains subdued as consumers brace for further financial pressures.

“Investing in technology to help reduce operational expenditure and mitigate increases in their cost base has never been more important. Optimising their store estate and focusing on having the right product lines in place will also ensure retailers are better placed to generate demand and capture customer spending. This may be a tough call at a time when cash and funds are tight, but investing wisely is crucial to stay competitive and improve operations. The key is to focus on areas that make the biggest impact while ensuring that the business remains agile and is able to respond to market demands,” Sophie said.

ALCHEMPro News Desk (HU)