// UK non-food retail sales values are expected to hit £249 billion in 2023
// The report found that 80% of retailers were planning to increase the price of products, with 40% suggesting rising costs will be the biggest challenge in 2023
UK non-food retail sales values are expected to hit £249bn in 2023, but the 2.6% increase, or an additional £18.2bn of spending on the previous year, will be driven entirely by rising consumer prices, new data reveals.
The Ecommerce Delivery Benchmark Report 2023, commissioned by Auctane, in partnership with economics consultancy, Retail Economics, included a survey of over 730 retail businesses across eight international markets.
It found that 80% of retailers were planning to increase the price of products, with 40% suggesting rising costs will be the biggest challenge in 2023.
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Retail brands are facing rising input and operating costs and with margins under so much pressure, it’s likely that some of these costs are being passed on to consumers, especially as merchants look for ways to find savings and preserve margins.These challenges are matched by consumer concerns about the outlook for the economy and their personal finances over the year ahead, with 66% of consumers in the UK citing inflation as their biggest concern.As a result, 74% of UK consumers plan to change their buying behaviours, with 34% stating they would only make purchases when necessary and 29% intending to delay or reduce spending. As a result of consumers’ reported plans to cut back and adopt recessionary behaviours, UK retail sales volumes (units of products sold) are set to fall 4.9% in 2023 compared to last year. This underlines the fact that shoppers are simply having to spend more to get less for their money with retail inflation expected to hit 7.5% over the year ahead.The research highlights that inflation is expected to add almost £260 billion ($319 billion) to retail sales in 2023 across the eight international markets included in the research.
However, many retailers remain optimistic about trading prospects in 2023, with more businesses holding a positive rather than negative view regarding the economy, and only 20% anticipating weaker consumer demand over the year ahead.Consumer sentiment and economic projections are generally at odds with retailers’ expectations for the year ahead. Of those small enterprise retailers surveyed, 80% expect order volumes to be the same or higher (59%) in 2023, with third anticipating order volumes to be 10% higher or more.
Retail economics chief executive Richard Lim said: “Retailers will continue to face a toxic mix of pressures this year as rising input and operating costs collide against a backdrop of weaker consumer demand, rising interest rates and shifting consumer behaviours.“These conditions favour those retailers who have strong balance sheets who can invest heavily in price, leverage data to target their most valued customers and win new ones, while efficiently utilising stores to provide a truly omnichannel proposition.“Those that carry high levels of debt, have weak pricing power and sit in the middle of the market could find life very difficult.”
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