Shoppers stayed away from the UK high street in March, a situation retailers said could worsen if the economic gloom caused by Donald Trump’s tariff war hits consumer confidence.
Footfall fell 5% in March to extend a downturn in February that retailers said could be attributed to a recent rise in inflation and pressure on pay packets since a brief revival during the January sales.
Out-of-town shopping centres were the worst hit, falling by 5.8%, though traditional high streets and retail parks also suffered a loss of sales after drops in footfall of 4% and 1.2% respectively.
The British Retail Consortium said that while the impact of US tariffs on imported goods was difficult to calculate, it could have a chilling effect on people’s willingness to spend, especially on expensive items.
Helen Dickinson, the organisation’s chief executive, said: “Global uncertainties resulting from tariffs and a potential economic slowdown could reduce the appetite for shopping trips in the coming months.”
Jobs surveys have shown levels of unemployment rising and job vacancies falling as employers shelve investment plans and become more reluctant about hiring.
A survey by the accounting firm KPMG and the Recruitment and Employment Confederation (REC) registered a further reduction in hiring activity in March. It said recruiters “frequently mentioned that economic uncertainty, tighter recruitment budgets and reduced client activity” were slowing the level of hiring.
“Permanent placements have now declined in each month for the past two-and-a-half years, with the pace of reduction broadly unchanged from February.”
Jon Holt, a senior partner at KPMG, said: “At a time when global uncertainty is peaking and businesses are assessing the impact of market volatility alongside rising employment costs, the latest data demonstrates how the economic reality continues to weigh heavy on the labour market.
“Recent global events have put pressure on any growth prospects in the UK, so it is unlikely that we will see an improvement in the data in the near term.”
Employers also reported keeping pay rates low, and especially starting salaries, despite the need to attract skilled staff. Salary inflation was at a four-year low in February and a modest improvement in March did little to boost overall levels of pay, the REC said.
Some retailers, including Tesco, have reacted by cutting prices to lure back cash-strapped shoppers. This week, the supermarket signalled it would be reducing prices of hundreds of items in competition with Asda, Aldi and Sainsbury.
Asda promised in March to embark on the company’s biggest price cuts for 25 years to make it more competitive.
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A consumer confidence survey by Deloitte, a firm of accountants, found widespread concerns about personal finances. A majority reported a decline in their disposable incomes and almost half (47%) of consumers said they had only been spending on essentials in the last three months.
The number of people saying they only spent on essential items in the first quarter rose to its highest level since the Deloitte Consumer Tracker began in 2011.
A spokesperson for Deloitte said the downbeat responses were a sign of persistent inflationary pressures.
This month, employers have coped with higher national insurance payments and a rise in the minimum wage while households have been hit with a range of tax and price rises, from an average council tax rise of almost 5% to water bill increases that in the Thames area and south-west England have risen by more than 30%.
The cost of gas and electricity went up by 6.4% – or £111 a year – at the beginning of the month.
The government needs to find ways to boost consumer confidence and ensure retailers can invest in jobs and stores. The upcoming business rates overhaul, aimed at supporting high streets, could make the situation worse for thousands of retail stores caught by the proposed new, higher threshold.
