Published on September 30th, 2020 | by The GC Team0
Fear for ‘golden quarter’ as shop prices fall
Shop Prices fell by 1.6% in September, a steady rate of decline as in August, with Non-Food prices dropping 3.2% as, according to the British Retail Consortium, retailers cut prices in order to encourage further spending where sales are yet to pick up.
Food inflation eased to 1.2% during the period, down from 1.3% in August.
But in spite of consumer confidence steadying over the past few months and showing a willingness to spend on big-ticket items, Mike Watkins, Head of Retailer and Business Insight at Nielsen, said the recessionary impact of the pandemic on retailing will become more visible during the `golden quarter`, noting that retailers are already adapting their business models.
“Food shop price inflation has slowed with supermarkets introducing new price cuts this month and Non-Food retailers had the additional challenge of selling through seasonal stock, disrupted by unpredictable weather.
“Looking ahead,” he said, “we can expect shop price inflation to remain at current low levels for the next quarter.”
Chief Executive of the BRC Helen Dickinson said consumers can celebrate yet another month of falling shop prices, particularly in Non-Food ranges such as clothing and footwear, but she warned that while retailers strive to provide the best value, quality goods, their ability to do so, come 2021, is under threat.
“Without a zero-tariff deal with the EU, supermarkets will be subjected to £3.1 billion a year of tariffs on food and drink, which they will have little choice but to pass on to their customers as retail margins are so thin. Many non-food retailers will also face large tariff bills and, as a result, the total cost to the industry and its customers would be much higher.”
Dickinson added that the Government must prioritise a tariff-free deal, “otherwise hard-pressed consumers will bear the brunt of price increases.”