March began positively, with the first two weeks of the month recording above inflation growth both on the high street and online. However, following the start of the conflict in the Middle East, growth started to falter in the third week of the month, with the fourth- and fifth-weeks recording declines of 3.04 per cent and 7.74 per cent respectively, compared with the same weeks in the previous year, reflecting the dramatic impact on consumer sentiment, BDO said in a press release.
UK discretionary retail sales rose just 0.8 per cent YoY in March 2026, signalling a volume decline after inflation, according to BDO.
Early growth in the first half was offset by sharp declines later, driven by the Middle East conflict and weak sentiment.
Rising costs and falling confidence are squeezing demand, with retailers bracing for a difficult spring amid mounting economic pressures.
Sophie Michael, head of Retail and Wholesale at BDO, said the early signs of recovery in March were quickly overshadowed by worsening economic conditions. She noted that escalating costs, including fuel, energy and labour, alongside subdued demand, are creating significant challenges for retailers.
She said, “After a dismal few months, March started with a ray of hope for retailers, above-inflation sales growth on the high street for the first two weeks suggested some green shoots of recovery with Mother’s Day spending giving retailers a boost. But, this was a month of two halves and those hopes were quashed in the final two weeks of the month.”
“Heading into Easter and the school holidays which should have given a promising start to Spring, it is now clear that this is going to be a hugely painful period for retailers. They are navigating an already challenging trading environment, while facing further rises in National Minimum Wage and expanding employment rights, increasing labour costs, against a shrinking consumer purse and falling consumer confidence,” added Michael.
Fibre2Fashion News Desk (SG)