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British Retail Consortium forecasts low retail sales growth for 2023

Jan 4, 2023 United Kingdom
British Retail Consortium forecasts low retail sales growth for 2023
According to the British Retail Consortium (BRC), UK retail sales will grow between 2.3% to 3.5% in 2023, with the pace somewhat picking up in the second half of the year
In the first half of 2023, retail sales are expected to increase by 1% to 2.3%, in line with the low retail sales growth, which remained below current inflation, that characterized the past year; food sales growth will also continue to outperform non-food categories. However, the deceleration of inflation and the improvement of consumer confidence in the second half of this year might lead to a retail sales growth of between 3.6% to 4.7% from the first half.

"The first half of the year is likely to be challenging for households and retailers. Ongoing inflation will make sales appear to be rising, but we expect falling volumes as consumers continue to manage their spending. We also don't see many signs at this stage of retailers' input costs easing, with energy costs expected to rise by £7.5 billion as the government’s Energy Bill Relief Scheme comes to an end in March, putting ongoing upwards pressure on prices", commented Kris Hamer, Director of Insight, at the British Retail Consortium.

But "there is cause for optimism in the second half of 2023, when we expect inflation to ease and improving consumer confidence to result in an improvement to sales growth, and corresponding volumes", he added.

BRC noted that 2022 was an "exceptionally difficult year for both consumers and retailers", as the many cost pressures already increasing throughout the supply chain were compounded by the war in Ukraine, which pushed inflation into an upwards spiral, with energy and food prices increasing by over 10%, year-over-year, during the second half of last year. During this period, total retail sales growth stood at 2.3%, but once inflation (rising to over 11%) is accounted for, "these figures represent falls in sales volumes for both food and non-food".

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