Retail Sales Plummet as Online Shopping Soars
Retail sales across the UK have reached abysmal lows compared to before the pandemic
Inflation and gas prices are higher than ever and shoppers worldwide prioritize their expenses. That means this year’s coveted summer retail sales are not as popular as major retailers expected. July is usually considered a slow month, but even with deep discounts put out to attract customers, shoppers are not purchasing goods.
Some theories show people spent the last two years buying goods online, meaning people want to spend their money more on vacations and activities rather than on buying things. Therefore, more money is going in to services such as restaurants and trips and less into clothing.
On the other hand, shoppers who want to stock up on discounted goods from retail sales can most definitely benefit from inflation’s effect on retail business decisions. Inflation has forced most people worldwide to prioritize their expenses and the incoming global recession spells low retail sales with every moment it looms closer.
Shopify stated that inflation had reached its highest levels since 1981, but it is now that its effects are beginning to seep into consumer psychology. Inflation determines the rising price of goods and services in the economy. It’s measured using the Consumer Price Index (CPI), an important indicator of price stability in the economy. The CPI determines the average price change of all goods and services purchased by urban consumers.
The UK’s largest retailers have also been affected by higher operational costs and a huge decline in stock prices since the crash of 1987. And, now, manufacturing inputs and fuel are even higher, as are wages. E-commerce is also more important than ever, so shipping costs are bound to increase for companies, which will result in charging consumers more for shipping, making them less likely to keep purchasing.
As a result of these factors, the pandemic and Russia’s invasion of Ukraine, planners expect an approximate 2% inflation rate, which most likely will keep increasing beyond that throughout the following year. Central banks have tried to counteract this by raising interest rates, but even these measures might not solve the immediate threat inflation represents to retailers.
So, consumers will likely have less money for their bills and everyday expenses, which translates into a pull-back from retail shopping.