The British Retail Consortium (BRC)’s data for April shows the Middle East conflict has taken a toll on shopping in the UK, with April footfall down 3.9% year on year, according to BRC-Sensormatic data.
Visits to the high street fell 3.3%, shopping centres declined 3.5% and retail parks dropped 3%.
BRC chief executive Helen Dickinson stressed the role of the Middle East conflict in the downturn. “The ongoing conflict in the Middle East pushed consumer confidence to new lows, prompting consumers to make fewer trips to the shops,” she said. “Retailers will be hoping that a sunnier outlook and major sporting events, like the World Cup, help reverse this trend in the months ahead. However, the prospect of higher inflation due to the conflict in Middle East could limit consumer appetite for shopping.”
However, Melissa Minkow, global director of retail strategy & insights at C&IT, took a broader view, suggesting the figures reflect “a myriad of variables” at play. She said: “With Easter occurring in March, fluctuating geopolitical tensions, and rising petrol prices, consumers have exercised caution, focusing on value and being more selective. Conditions such as warmer weather and the London Marathon, which would historically have driven a strong uplift, are being offset by pressures on household finances.”
Retailers brace for cost pressures as BRC calls for government action
Minkow acknowledged it remains a “challenging time” for retailers, with many already taking proactive steps to offset the impact of the Middle East conflict. Next was among the first UK retailers to flag potential price increases; it plans to raise prices for international customers and introduce operational efficiencies to offset part of the £47 million hit to its business.
With price rises increasingly likely, the BRC is urging the government to act on rising domestic policy costs. New polling shows four in five people (80%) fear the Middle East conflict will push up food prices.
Highlighting that the impact of the conflict comes on top of increases to minimum wage and National Insurance, alongside other looming regulatory costs, the BRC argues that action is needed on costs within government control.
“Higher national insurance, packaging levies, new regulations, and business energy charges are all domestic policy decisions, made in Westminster, and they can be addressed there. Such action by government would help retailers to keep prices affordable for households,” Dickinson said.
Pointing to similar moves by other governments, she added that the burden of keeping prices down cannot fall solely on retailers. “Every cost government chooses not to address is a cost that will find its way into someone’s shopping basket. That is a political choice, and it is one ministers still have time to change – but the window to act is closing.”
With April footfall showing that the Middle East conflict is impacting heavily on consumer confidence — and some analysts estimating that it will take at least seven months for the world’s oil production to recover once the Strait of Hormuz reopens — retail is under pressure from every angle, leaving retailers with little room to absorb the strain and even less time for policymakers to step in.
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