Retailers think trade will improve in 2011

The trend of falling confidence in the retail and wholesale sector was curbed in the first quarter of this year.

Retailers think trade will improve in 2011

According to the latest ICAEW/Grant Thornton UK Business Confidence Monitor, retail confidence has been declining for three quarters in a row. It is now marginally above that of the last quarter, Q4 2010, but still well down on the high seen in the sector at the same time last year.

BCM says that retailers expect improvement across key financial performance indicators over the year ahead. Gross profits are expected to increase by 4.2%, compared to the 2.8% increase seen in the last 12 months, while sales volumes are expected to rise by 4.9% – they were up 3.4% over the last 12 months.

The survey also shows that retailers think prices will go up by 2.4% in the next year, but that they expect to increase employee numbers too, by 1.3%.

However, despite these hoped-for improvements in business performance, firms in the retail and wholesale sector are still more tentative about overall economic prospects than other UK industries. Only 38% of retailers are more confident about the next 12 months, compared to a national average of 44%.

Commenting on the research, Grant Thornton’s head of retail, Barry Knight, said that retailers’ hopes of a better performance over the coming year may not be realised, with many retailers reporting this February as being one of the worst months they have ever had.

“Trading conditions will remain volatile and the UK consumer is expected to increasingly tighten their belts, as falling disposable income and the rising cost of living, alongside government spending cuts and looming job losses, continue to pinch,” he said.

“There is however some positive news to come over the next quarter. The royal wedding in April could potentially inject an additional £1.5bn worth of spending across the retail sector from memorabilia and other related items, with this boost hopefully sustained some time after thanks to increased tourism.”

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