2022 was a year plagued by sky-high inflation and dampened consumer demand, as the ‘cost-of-living ‘crisis became the buzzword of the year. It looks like retail sales will continue to be challenging in the first half of 2023. The BRC predicts retail sales will edge up between 1% and 2.3% in the first six months of year. However, the trade body forecasts a brighter second half, with retail sales expected to grow 3.6% to 4.7%. Although the headline annual figure of 2.3% and 3.5% growth looks positive, this is driven by price inflation with sales volumes expected to fall.
Which sectors will be in growth?
Grocery +6.0%
Retail Economics predicts that grocery will be the strongest performing category with sales up 6% on last year. This is unsurprising as shoppers with squeezed budgets prioritise essential items. Last week, Lidl revealed it has gained nearly £11 million in switching gains from M&S, Waitrose and Sainsbury’s during January, an increase of over £10 million year on year.
Health & Beauty
The health and beauty sector is one that generally remains resilient in tough economic climes as shoppers continue to splash out on little treats to make themselves feel good. The signs from Christmas show this to be true as all the big players in the sector including Boots, Superdrug and Lush, posted strong results.
Online – 0.3%
The last year has been turbulent in ecommerce, following from the surge in online shopping during the pandemic. According to trade body IMRG, online sales have declined every month since April 2021, bar a slight rise in November 2022. However, sales still remain 17% higher than 2019’s pre-pandemic levels.