“It’s never been more stark – small businesses need help” as retail sales fall

Buying less food is one of the few options for cash-strapped households battling inflation

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Retail sales volumes fell by 0.5% in May 2022, following a rise of 0.4% in April 2022. In the three months to May 2022, sales volumes fell by 1.3% when compared with the previous three months; this continues the downward trend since summer 2021.

Commenting on these latest figures, Kevin Brown, savings specialist at Scottish Friendly, said: “Rising living costs are now affecting the daily spending habits of large swathes of people across the country, not just those who are on lower wages.” 

“Higher prices mean that millions of families are buying less food. As many as 44% of adults, surveyed by the ONS, say they have bought less when shopping in the last two weeks.”

“Shopping in cheaper stores, cutting back on luxury items and strict budgeting are some of the ways to combat inflation, but if your outgoings are already equal to or higher than your income then your options are slim.”

“Wages in the UK are falling by 2.3% in real terms so on average UK household earnings are failing to keep pace with inflation. This is of particular concern in the public sector where earnings are falling even further behind.”

“This result is more and more people are being forced to delve into their savings to make ends meet, which could have a long-term, detrimental effect on their finances.”

Alan Thomas, UK CEO at Simply Business, commented:

“With soaring energy costs and the ongoing cost of living crisis, it’s no wonder that we’ve seen a decrease in retail sales. The slight rise in April 2022 was short lived, with geopolitical developments affecting the cost of raw materials, food and petrol. Unfortunately, it’s sole traders and micro-businesses who’ll have to absorb most of the pressure.” 

“It’s never been more stark – small businesses need help. Small retail businesses are still in recovery mode as a result of sporadic lockdowns, and they desperately need to drum up trade. We’re now facing the highest inflation levels for 40 years, crippling energy prices, and huge rises in the costs of petrol and consumer goods. Unsurprisingly, consumers are unwilling to spend their money.” 

“The country’s six million small businesses will play an essential role in the UK’s economic recovery. We know that SMEs were hit hard by Covid – on average, small business owners have lost £22,000 each in lost earnings since the pandemic began. As we face an uncertain future, it’s more important than ever to support small businesses on their route to recovery.”

Meanwhile, Euan Murray, relationship director and retail sector expert at Barclays Corporate Banking, struck a more optimistic note. He said:

“This data isn’t good, but is it as bad as it seems? Retailers will hope not. May 2021 marked the reopening of retail after lockdown and saw the release of significant pent up demand, so comparisons versus this month may be harsher than expected. Industry leaders will now be wondering if the actual situation is as negative as this comparison makes out.”

“2021 was the year of home improvement when it came to retail spending, but in 2022 the focus seems to have switched to self-improvement – as retailers in the health and wellness space are amongst the few success stories this month.”

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