// Christmas failed to turn the tide on deteriorating retail health, the KPMG/Ipsos Retail Think Tank says
// Retail Health Index now stands at a new record low of 74, the lowest score on record
// The score on the index also declined every quarter in 2019
// However, the UK retail is predicted to grow by at least one per cent this year – although it won’t be immediate
A index that measures the overall health of the UK retail industry has recorded its lowest ever score, as the golden quarter of 2019 failed to provide retailers any respite.
According to the KPMG/Ipsos Retail Think Tank, the state of retail health deteriorated every quarter last year as dwindling consumer confidence impacted sales and footfall, and a soaring number of retailers shut down stores through CVAs or administrations.
The think tank’s Retail Health Index – a quantitative and qualitative assessment of demand, margin and cost – now stands at a new record low of 74.
This is the lowest score on the index not recorded since the think tank’s inception in 2006.
- 2019 was UK retail’s worst year ever (BRC/KPMG)
- Retail Think Tank hails 1% retail industry growth for 2020
Demand over the key trading weeks prior to Christmas failed to make up for lost ground if looking at the final quarter of 2019 as a whole.
The think tank’s members said demand in the golden quarter didn’t rebound enough following the conclusive General Election result to release any pent-up consumer demand.
In addition, the later timing of Black Friday and Cyber Monday applied additional pressure to retailers’ margins, with aggressive discounting rife during the quarter in order to get stock moving.
Despite the grim year, the think tank previously predicted that some improvement in the sector’s health was likely to materialise in 2020.
In fact, UK retail is predicted to grow by at least one per cent this year, after what the Retail Think Tank described as “three and a half years of pain”.
However, the Retail Think Tank said that the industry’s health won’t rebound immediately, with the overall index score for the first quarter of 2020 predicted to hold steady at 74.
“A mere glance at recent Christmas trading reports and accompanying media headlines confirms that the final quarter of 2019 was a real mixed bag as far as retail performance is concerned,” independent retail analyst Nick Bubb said.
“It’s hard not to focus on grocery in particular, given its prominence during the festive period.
“There has generally been a weakening of grocery sales in recent months, which is testament to wavering consumer demand, and there was a notable disparity between the ever-growing discounters and the main supermarket chains.
“Further illustrating the industry’s struggles, and adding to the more downbeat mood music, the latest BRC-KPMG retail sales monitor revealed that total sales declined 0.9 per cent year-on-year, if looking at November and December 2019 combined.
“Moreover, even online sales were notably lacklustre, with growth of only 2.6 per cent in November and December 2019, despite an increasing number of sales taking place online.”
He added: “All in all, the final quarter of 2019 marked a disappointing end to what can only be described as an extremely challenging and turbulent year.”