Improving retail health set to stall

The health of retailing improved in the second quarter of the year, for the third quarter in a row, but is not expected to continue into quarter three, according to the KPMG/Synovate Retail Think Tank.

Improving retail health set to stall

“Retailers are a key bellwether of the consumer economy,” says Tim Denison of Synovate. “Thus it’s good news that the state of retail health has been recovering since the final quarter of 2009 and that retailers have, in the main, come through the recession remarkably well.

“However, retailers are not out of the woods yet, and the progress seen in the first half of 2010 will stall going into quarter three, as retail demand enters a stasis period.

“On the upside, the future VAT rise will give retailers an opportunity to review their pricing strategy from now until the new year, which, in the short term, could benefit margins and also provide a smooth transition into 2011 when customers may be more fearful of step changes in prices.”

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