Sink or swim

Just when we thought it was safe to go back into the waters of buoyant retailing, inflation soars, the supply chain worsens and consumer confidence falls to its lowest level in nearly 50 years.

Consumer spending has been one of the main props of the economy in recent years and has helped drive the recovery since the pandemic, but now we’re faced with heightened fears of a recession.

Business and market researcher GfK says the measure of consumer sentiment has fallen to minus 40, the lowest level since records began in 1974.

Economists say that when the consumer confidence index falls below minus 30, households start reining in their spending.

But will they? Not only are there things that retailers can do to weather the storm, but retail sales volumes actually increased by 1.4% in April, according to the Office of National Statistics. The biggest driver was food sales, which rose by 2.8pc.

Andrew Goodacre, CEO of the British Independent Retailers Association, offers some practical advice on these pages while his organisation, of which the NAHS is a member, is calling for more practical support for independents.

“Inflation at these levels, the highest for 40 years, is a new challenge for many independent retailers,” he says.

“Whilst there is understandable focus on the cost of living, we would urge the Government not to forget about targeted support for businesses also struggling to deal with the extra costs due to inflationary pressures.

“Retailers are doing all they can to reduce the impact on prices for shoppers which means reduced profit margins for everyone. We would like to see this year’s 100% increase in business rates reversed and some way of helping businesses manage the rising costs of energy.

“Since last summer we have been warning of double-digit supply chain inflation that would result in higher prices. However, retailers are doing all they can to limit the price increases as they recognise that the shoppers have less money to spend. Furthermore, we are concerned about the rising cost of debt payments as a result in interest rate rises as many more independent retailers have increased levels of debt due to Covid.