Slow wage growth in the UK will lead to fiercer competition among retailers in the coming Christmas season, according to a British trade analyst.
The 2.2% earnings growth in the three months to September leaves UK household wages falling in real terms, new figures by the British Office for National Statistics (ONS) have revealed.
The low wage growth has already sobered expectations by the Bank of England and other forecasters.
This time last year the Bank expected growth to reach 2.75% by the end of 2017. Two years ago, it expected it to be 4%, while now it expects just 2.25%. And even these numbers are predicated on a rise in wage growth next year, according to the British Retail Consortium (BRC).
“That means budgets in the run-up to the festive period will be stretched and retailers will have little choice but to compete harder in what is already one of the most competitive markets in the world,” said Rachel Lund, head of retail insight and analytics at the BRC.
‘Golden Quarter’ Worries
Recently, figures by BRC and KPMG revealed that UK retail experienced a record decline in non-food sales in October 2017, compared to the same month in the previous year. Total growth during October this year was at its lowest since May.
These numbers don’t bode well for the beginning of retail’s ‘Golden Quarter’ in the run-up to Christmas, with more people saying they’d save money in the year ahead.
"While reports by the Bank’s agents suggest higher pay growth might be in the pipeline, however if activity doesn’t pick up businesses may not be in a position to put those pay increases in place. So we urge the Chancellor to do all he can next week to support UK consumers with a budget for shoppers,” says Lund.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Kevin Duggan. Click subscribe to sign up to ESM: The European Supermarket Magazine.
