March saw UK retail sales increase by 0.4% which represents the most substantial quarterly growth in four years, as reported by the Office for National Statistics (ONS).
The data illustrates a robust rebound in consumer expenditure following several months of economic instability.
The upward revision of February’s sales by 0.7%, along with Q1 growth, delivers much-needed support to retailers facing difficult trading conditions.
Sales Data Breakdown
Food Stores
Sales volumes rose 0.6% in March thanks to a surge in demand for seasonal products ahead of Easter.
Non-Food Stores
Clothing and household items drove a 0.3% increase, signalling renewed discretionary spending.
Online Retail
Online’s share dipped to 25.8% in March from 26.3% in February.
Fuel Sales
Fuel sales recovered 3.5% as stabilised prices and increased mobility boosted volumes.
The monthly gains contributed to a 2.0% rise for the quarter, underscoring consistent consumer strength.
Underlying Factors
Easter Shopping
Early holiday buying for late-April Easter lifted sales of chocolate and decorations.
Consumer Confidence
Stabilising wage growth and easing inflation unexpectedly spurred discretionary spending.
Better Weather
Warmer March weather drew shoppers back to high streets for spring attire and garden items.
Promotions
Aggressive discounting helped retailers clear stock and attract cautious consumers.
Retailer Reactions
Tesco CEO Ken Murphy praised strong seasonal demand and customer loyalty amid budget pressures.
BRC chief Helen Dickinson warned that innovation must continue to meet evolving shopping habits.
Sainsbury’s credited a blend of value pricing and convenience for its performance uplift.
Market Implications
FTSE 250 retail stocks rallied, reflecting improved investor sentiment on the sales data.
Marks & Spencer jumped 2.1% and JD Sports gained 1.8%, driven by optimism in apparel segments.
Analysts remain cautious about rising energy and wage costs squeezing margins.
Analyst Commentary
Nick Bubb noted the Easter effect may overstate trends and urged watching post-holiday data.
Natalie Berg said grocery and budget fashion resilience is encouraging but cost pressures persist.
Outlook
Guarded optimism remains as Q2 momentum hinges on sustained confidence and easing inflation.
Retailers must balance low prices with healthy margins and innovation amid uncertainty.
Q1’s performance confirms the sector’s resilience and adaptability in unpredictable conditions.
