The retail industry suffered heavily at the hands of the recession, with news of administrations and liquidations hitting the press at an alarming rate. However, thanks to a combination of factors, recovery appears to be in full swing with the British Retail Consortium (BRC) predicting 2014 to be the year that retailers finally see the light at the end of the tunnel and begin to significantly grow sales.
One of the main contributory factors for this recovery has been the upswing in consumer confidence, which last month hit its highest level in three years. According to the Lloyds Bank Spending Power report consumer confidence climbed by six points in January to reach 129 points – a new high for the survey which launched in 2010.
Part of the reason for this leap in confidence may well be the improved consumer outlook for the economy, which climbed by 12 points last month. This means that the majority of those surveyed expressed a confidence in their personal finances, with 57 per cent describing their situation as “excellent” or “good” and expecting this to further improve in the next six months.
Furthermore, according to recent data, the Consumer Prices Index (CPI) fell below 2 per cent in January, with a reading of 1.9 per cent. This is the first time that it has fallen below the Bank of England’s 2 per cent inflation target for more than four years, and experts believe this will further improve as 2014 continues.
Retailers are now hoping that this will significantly ease the pressure on households. In fact, many experts are now predicting that 2014 could finally be the year in which wage growth overtakes rises in the cost of living and thus boosts disposable income.
Lloyds’ director of personal current accounts, Philip Robinson, says; “With consumer sentiment continuing its upward trend, together with the highest positive levels seen to date towards personal finances, 2014 continues to show signs of a more stable year.”
Unfortunately for retailers, though, the report also showcased the very real concerns still burdening a large number of consumers. Gas and electricity spending rose by about 6 per cent in January as a result of increases in energy bills, with 77 per cent of respondents claiming they were very concerned about future rises.
Additionally, 14 per cent of the 2,000 consumers surveyed planned to increase the amount they save in the first part of the year, meaning retailers may feel the pinch until consumers can be entirely confident that the financial crisis is well and truly over.
With wage growth on the rise and inflation falling, hopefully 2014 will live up to expectations and see widespread recovery for all UK industries.
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