BRC warns of ‘challenging year’ to come for retailers

The BRC, which flagged the possibility of a “January spending squeeze”, said retailers would have to increase prices or cut costs.

The organisation’s latest consumer confidence monitor showed a slide in sentiment about the economy. There were declines in the measurements of consumers’ overall personal spending and retail spending.

BRC chief executive Helen Dickinson said: “Public confidence in the state of the economy took a nosedive. This created a widening gap between expectations of the economy and of people’s own finances, which remained unchanged.

”Perceptions were heavily skewed by age, with 18- to 35-year-olds considerably more upbeat than older generations on both questions. The public’s spending intentions – both in retail and beyond – dropped six points, with expectations of spending in nearly every retail category falling. If these expectations are realised, retailers could find themselves facing a new year spending squeeze just as they unveil their January Sales.

“The weak spending intentions could pave the way for a challenging year for retailers, who face being buffeted by low consumer demand and £7bn of new costs from the Budget set to hit the industry in 2025.

“With sales growth unable to keep pace, retailers will have no choice but to raise prices or cut costs – closing stores and freezing recruitment. To mitigate the impact this will have on growth, the government must ensure that its proposed business rates reform does not result in any shops paying higher rates than they already do.”