GlobalData has revised its 2024 retail growth forecast down to 2.1% and the clothing and footwear sector now projects a 3.1% decline due to “disappointing” retail sales in the first half of the year, despite improving consumer sentiment.

Global Data’s latest forecast for the UK retail market reveals that despite inflation falling to the government’s 2% target in May and wage growth outpacing inflation, retail spending remains subdued.

In the company’s webinar: “UK Retail Update Q2 2024” its forecast for 2025 onwards has remained fairly similar as it believes further spending growth will rise as consumers start to feel better off and living standards start to improve throughout this year.

Clothing and footwear has seen a significant downward revision and is now expected to decline by 3.1% in 2024.

Sofie Wilmott GlobalData’s associate director of the retail division explained that UK clothing and footwear retailers have struggled so far in 2024. She attributes this to the poor weather and a late start to spring and summer meaning shoppers have been slower to buy into those warmer weather items.

While UK retailers M&S and Next have performed well, many clothing retailers, including ASOS and Boohoo, have struggled. Additionally, sportswear categories have experienced a slowdown post-pandemic.

Inflation and volume contribute to overall UK retail spending growth

High inflation in 2022 and 2023 significantly drove the overall retail spending growth, while volumes are firmly in negative territory as consumers cut back on non-essential spending to cope with higher prices and tighter budgets.

This year, GlobalData expects inflation to remain the main driver of growth, although it will decrease significantly, and volumes will only show marginal growth.

“Despite experiencing two years of poor volumes, consumers are still shopping cautiously, and we have not yet seen an increase in spending following the crisis crossover,” said Willmott.

From 2020 onward, a more equal contribution from volume growth and inflation is expected in a more stable economic environment compared to recent years.

Online retail is predicted to outpace offline growth in 2024, reversing the trend seen in 2022 and 2023 when physical stores rebounded post-pandemic.