Retail health deteriorates further in first quarter

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retail health
// UK retail health continues to teeter just above historic lows, according to KPMG & Ipsos
// Retail Health Index sits at 77, just above all-time low of 76
// Q1 health deteriorated amid declining demand, squeeze margins and growing costs for retailers

The health of the UK retail industry has declined to near-historic lows, as the first quarter saw deterioration amid wavering demand, increasingly squeezed margins and growing costs for retailers.

The score of the latest Retail Health Index, compiled by KPMG and Ipsos Retail Think Tank, stands at 77 – which is just one point above the historic low of 76 that was recorded during the double-dip recession of 2012/13.

Looking ahead to the second quarter, retail think tank members were a little more optimistic and pointed to the later occurrence of Easter, brighter weather, as well as the delay of Brexit and subsequent impact on the consumer’s psyche.

However, while the quarter holds more promise, the think tank predicts that retail health will only flat-line due to increased cost to retailers.

“The remorseless strain on retailers continued in quarter one, culminating in yet more casualties on the high street,” Ispos Retail Think Tank co-chair Dr Tim Denison said.

“All three drivers – demand, margins and cost continued to put downward pressure on retail health.”

Paul Martin, co-chair and UK head of retail at KPMG, added: “The Easter sunshine will surely have provided many retailers with a positive start to the second quarter of 2019.

“However, while some measures may suggest that this has indeed been the case, retailers cannot hide from the continuing consumer uncertainty and importantly, the ongoing structural changes within the sector which remain a key driver of instability”.

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