Retail Index reveals poor health

The health of UK retail has now slipped to its lowest level since early 2006. According to KPMG/SPSL Retail Think Tank (RTT), the overall state of retail health slipped three index points to 95 in the second quarter of this year.

The Retail Health Index guide has revealed key drivers of demand, margin and costs all contributed negatively to the retail market.

In addition, the RTT predicts a further deterioration of the sector by next quarter to 91, representing an accelerated decline.

“Quarter two saw increased negative impact of demand, margins and costs; all of which are expected to worsen in quarter three. The choices of retailers as to how they meet these challenges are beginning to seriously narrow and we cannot currently see any light at the end of the tunnel,” says Helen Dickinson, a member of the RTT.

The RTT members agree that demand will weaken further in quarter three and blamed the projected worsening rate of decline most specifically on a growing deterioration in demand, rather than margins or costs.

The panel also sees a split between the fortunes of food and non-food retailers and says that the size of the non-food market will contract further in the next quarter.

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