Twitter
Facebook
Linked In
RSS
Login or Register
New to InternetRetailing?
Register Now
Internet Retailing
You are in: > Home > Themes > Customer

This is your 1 complimentary article for this month

Become a member for unlimited and immediate access.


Register
Already a member? Log in here

CBI warns of continuing weak demand, but shoppers insist they are confident

Linked InTwitterFacebookeCard
Consumer confidence is low, but slowly growing
Consumer confidence is low, but slowly growing
Sharelines

CBI points to January retail sales being poor – but Deloitte's consumer confidence tracker offers some reasons for hope

The Confederation of British Industry (CBI) has warned that January retail sales were “poor for the time of year”, and that responses from retailers showed weak consumer demand would continue into February. However, a consumer confidence tracker run by Deloitte suggests that consumer confidence is starting to grow.

 

The CBI’s monthly distributive trends survey showed that a rise in purchases at department stores failed to offset the effects of weak demand across the high street, translating into flat sales for the third month in a row.

 

Anna Leach, deputy chief economist at the CBI, says: “Both official data and business surveys are painting a picture of subdued activity for retailers. A challenging Christmas has extended into the new year, with little expectation of any improvement soon.”

 

However, according to the latest Deloitte Consumer Tracker, UK consumer confidence saw moderate year-on-year growth, of 0.5 per cent, in the final quarter of 2019 signalling a more optimistic mood as consumers enter 2020.

 

With political uncertainty lifting, so too has consumer sentiment on the state of the economy, job security and personal finances. However, retail spending is expected to remain subdued until these factors gradually translate into greater sales.

 

Deloitte’s analysis, based on responses from more than 3,000 UK consumers between 3rd and 7th January 2020, revealed sentiment on the state of the economy grew significantly compared to the previous quarter, rising 27 percentage points.

 

Despite year-on-year confidence around career progression and job opportunities falling three percentage points (to -6%), job security sentiment has risen three percentage points (to -5%) on both the last quarter and compared to the same period last year. This corresponds with businesses being more optimistic about hiring intentions over the next 12 months, a measure that reached a four-year high in Q4 2019, according to the latest Deloitte CFO Survey.

 

Ian Stewart, chief economist at Deloitte, says: “Consumers enter the new decade with significantly improved confidence, though expectations of a slowdown in the employment rate and in real earnings growth could produce headwinds. However, if the reduced political uncertainty results in a strong rebound in corporate activity in 2020, such headwinds may not materialise.”

 

Lacklustre Christmas sales take the shine off retail ‘Golden Quarter’

Tough trading conditions for retailers in the lead up to Christmas saw much earlier and heavier discounting than in previous years.Deloitte’s data revealed average discounts reached 47% by Christmas Eve, and 52.8% on Christmas day itself; 0.7% deeper than last Christmas. However, strong economic fundamentals of low unemployment, low inflation and real wage growth have enabled consumers to have greater disposable spending power, with discretionary spending moving into positive territory for the first time since the Deloitte Consumer Tracker began in 2011.

 

Ben Perkins, head of consumer research, commented: “While consumers appear much more optimistic about their own personal finances, this has yet to be reflected in consumer spending. Online continues to show strong growth, but retailers across the board are looking to attract new customers as well as retain their loyal base in 2020. Opportunities are likely to be found through continued investment in both online and in-store experiences.”

 

Staying in is the new going out

Consumer spending in the leisure sector, while flat in the final quarter of 2019, was on par with the exceptional growth seen this time last year. As consumers continue to favour experiences over goods, the colder weather saw notable growth in in-home leisure, such as food delivery services and on-demand entertainment.

 

Simon Oaten, partner for hospitality and leisure at Deloitte, adds: “An increase in spending in the eating and drinking out and culture and entertainment categories indicate that, despite tightening their belts, consumers continue to favour experiences over goods when deciding what to do with their spare cash.

 

“Looking ahead, leisure businesses will need to keep a close eye on how consumer fundamentals perform over the coming months, especially those in the small-ticket leisure categories where spending can rapidly contract if consumers’ circumstances change.”

 

As consumers turn their attention to fitness in the new year, the next three months will see anticipated increased leisure spend in going to the gym or playing sport, up six percentage points on the last quarter. Consumers also expect to spend more in Q1 2020 attending live sports events and in the gaming leisure categories, each up two percentage points quarter-on-quarter.

 

Retails also have to up their game and use technology to develop coping strategies. According to Stefan Spendrup, VP Enterprise Mobility of Northern & Western Europe at SOTI: ““News from the CBI that January retail sales have been poor and that weak consumer demand will continue into February, is a stark reminder for retailers that they must radically transform the way they engage with customers and build relationships in-store, if they want to survive. Innovations such as the Internet of Things (IoT) and Artificial Intelligence (AI) have bred new technologies like in-store tablets, online chatbots and virtual reality, which have all raised the bar when it comes to the level of experience that can now be brought to customers. These improved experiences add value and foster mutually beneficial ongoing relationships between consumers and brands. According to our own research, 67% of shoppers are more likely to shop at a store that integrates technology.”

Linked InTwitterFacebookeCard

The InternetRetailing Newsletter

A curated update containing news analysis, reports, podcasts and opinion - completely free and delivered three times weekly

Become a Member

Create your own public-facing profile
Gain access to all Top500 research
Personalise your experience on IR.net
Internet Retailing
We are the magazine, portal and research source for European ecommerce and multichannel retail, hosting the board-level conversation for retailers, pureplays and brands across all of our platforms. Join the conversation.

© InternetRetailing Media

Latest Tweet

Internet Retailing
Tamebay
eDelivery
Twitter
Facebook
Linked In
Youtube
RSS
RSS
Youtube
Google
Linked In
Facebook
Twitter