Customers prove that power is in their hands in the UK retail market

This activity is due to retailers dropping prices to promote business. According to the data from the ONS, average store prices saw a decline of 1.5% during this October, compared to the same period last year. Prices, excluding food, saw an annual rate decline of 1.2% during October, compared to 0.9% during September. Annual price declines were experienced in all spending categories, including petrol stations, clothing, household goods, internet sales, footwear, department stores and supermarket. This is the first time this has occurred in more than 10 years.

The explanation for this phenomenon is easy. Retailers encountered a tough September when they tried to increase prices after the summer sales. The easiest method of moving stock is to drop the prices and that is exactly what they did. Sales volumes declined by 0.3% during September, but increased during October.

This trend is set to continue. Consumers are still feeling the pinch on real incomes and those with spare cash know that if they refrain from buying, retailers will start to panic and prices will drop. Retail profit margins are dropping and this will become evident in their trading results in the next few months.

The battle of the high street has begun and only one party will be victorious.