Low inflation boosts retail sales

The upward trend in sales should continue into 2015.

6th March 2015, words by Marie Hickey

 

■ The combined effect of low inflation, an improving economy and wage growth should mean that people will see more money in their pocket in 2015, boosting retail sales.

■ Slowing inflation over the latter part of 2014 corresponded with an improvement in retail sales, with the most noticeable growth in comparison spending. Household goods reported a significant 7.0% increase year-on-year in December, on a rolling 12-month basis, its highest level since December 2004 (see Graph 3).

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Graph 3

■ This upward trend in sales should continue into 2015 as indicated by historical trends. For example, between May 2000 and May 2001 the low inflation environment corresponded with an average annual growth in clothes and household retail sales of 6.8% and 6.5% respectively.

■ The real question is whether this improvement in sales can be captured by the high street. Out of town retail parks were the only centres to report footfall growth during the latter part of 2014 helped by the convenience they offer in terms of click-and-collect and the improving demand for household goods, which tend to concentrate in out-of-town locations.

■ Going forward, it is likely to be the 'destination' high streets and shopping centres, which offer consumers something different, that will be the primary beneficiaries of the improving sales environment.

 

 
 

Key Contacts

Marie Hickey

Marie Hickey

Director
Commercial Research

Savills Margaret Street

+44 (0) 20 3320 8288

 

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