Total retail sales in discretionary spend categories grew by +1.8% in March, failing to offset a negative base of -2.2% in the same month in 2024, according to BDO’s latest High Street Sales Tracker.
The latest report from accountancy and business advisory firm BDO shows that retailers failed to drive any significant growth in consumer spending in stores last month, with sales in-store increasing just +0.3%, compared to a negative base in March 2024 of -1.8%.
This is well below the rate of inflation, which means that actual sales volumes shrank in March compared to the same month last year.
The lifestyle and homewares sectors fared particularly poorly last month, with sales in-store shrinking by -0.7% and -2.8% respectively compared to the same period last year.
This poor performance reflects broadly negative economic sentiment among consumers. With many households facing increases in energy and water bills and council tax in April, consumers are holding back on spending amid potential pressure on their finances.
Sophie Michael, Head of Retail and Wholesale at BDO, said, “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.
“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.
“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.”
