Shop prices drop for seventh month in a row » SMEInsider

Shop prices drop for seventh month in a row

Intense competition in the retail sector meant that, on average, in-store prices were 1.8% lower than they were in September last year – and prices are falling at an accelerated rate.

When food prices are taken out of the equation, the drop is even more dramatic, with prices in the non-food category falling by 3.2%. This is thought to be the result of an unusually warm and dry start to autumn that has made it difficult for clothing retailers to shift seasonal shoes and garments. However, books, furniture, electrical goods and DIY products also recorded falling prices.

The figures, collected by the British Retail Consortium and Nielsen, may be good news for consumers but are likely to be squeezing profit margins for retailers and supermarkets. This will also increase pressure on smaller companies that struggle to compete. As businesses fight it out for customers in the months leading to Christmas, price slashes could be a race to the bottom for the retail sector.

Helen Dickinson, director general at the BRC, commented: “Retailers are turning their attention to Christmas by reading current conditions and matching consumer sentiment well with their promotions and offers. Falling commodity prices, the strengthening of sterling, benign pressure in the supply chain and, critically, fierce competition across the retail industry suggests lower shop prices for consumers will continue.”