As featured in the October edition of PBM, the latest instalment of The Pulse reflects on the ongoing uncertainty in the economy, however some positive signs can be found amidst the gloom.
Merchants expected sales to fall as the cost-of-living crisis and soaring prices weakened consumer demand. Merchants’ confidence in the market remained low but showed signs of recovering, despite multiple challenges in an uncertain trading environment. Indeed, merchants’ confidence in the prospects for their own business picked up during the reporting period.
The Pulse, by MRA Research, is a monthly tracking survey of merchants’ confidence and prospects. Telephone interviewing took place between 1st and 3rd August 2022 (three working days).
Problems faced by merchants
Merchants continued to face many problems in a difficult trading environment — Chart 1. Nearly half (47%) of all respondents said supplier price rises were their single biggest problem. In addition, product availability (23%) and squeezed margins (13%) were the single biggest problems for over a third of merchants, and highlighted as being problems for most merchants.
Sales expectations
The continued uncertainty of the trading environment weakened merchants’ expectations of future sales, with sales expectations for August declining from July to a net -5% — Chart 2.
National merchants (+11%) and Small branches (+5%) still expected sales to increase, however expectations were weak among Independents (-31%), Mid-sized outlets (-15%) and in the North (-18%).
Year-on-year sales expectations continued to weaken from a net +64% year-on-year in January to a net -13% in August, indicating a sales decline for the first time in 18 months. Merchants across all regions except the South expected sales to fall: Scotland (-50%), the North (-36%) and Independents (-56%). Merchants in the South (+21%) still expected sales to increase.
Looking six months ahead, a net -12% of merchants expected sales to decline in the six months Aug 2022 to Jan 2023 compared to the previous six months — Chart 3.
Nationals (+29%) expected sales to grow whereas Independents (-44%) and Regionals (-35%) expected sales to reduce. Similarly, Small branches expected sales to grow (+17%) whilst Mid-sized outlets (-32%) and Large branches (-33%) expected sales to contract.
Just over a quarter (+26%) of merchants anticipating sales to contract in the next six months expected them to fall by up to 9%. About half (47%) expected a decrease of between 10 to 20%. Almost 1 in 10 (8%) expected a drop of more than 10% — Chart 4.
Confidence in the market
A net -28% of merchants were less confident in the market in August than in the previous month — Chart 5. Market confidence was marginally stronger than in July but confidence in the market was weak across all sizes of outlet, regions and types of merchant. Large outlets (-61%) and Independents (-50%) were the least confident in the market.
Year-on-year, market confidence recovered slightly to a net -40% of merchants less confident in the market in August than they were in August 2021. Compared to 2021, confidence dropped across all sizes of outlet, regions and types of merchant. Merchants in Scotland (-75%) and the Midlands (-55%) were least confident.
Confidence in their business
Merchants’ confidence in their own business improved to a positive net +19%, month on month — Chart 5. Confidence was strong among Small branches (+29%) and Mid-sized outlets (+24%). Confidence was weak among Large outlets (-17%).
Independents (-12%) had less confidence in the prospects for their own business than Nationals (+32%) and Regionals (+20%).
Merchants’ confidence in their own business strengthened slightly Year-on-Year to a positive net +5%. Small branches (+24%) were confident but a net -44% of Large outlets were less confident in the prospects for their business than they were last year.
A net +13% of Merchants in the South were confident. The North was least confident (-14%). The contrast between Nationals and Independents was stark, with Nationals more confident (+29%) and Independents less confident (-31%).
The full report can be downloaded for free from www.mra-research.co.uk/the-pulse or call Ralph Sutcliffe at MRA Research on 01453 521621.
* The difference between the percentage of merchants expecting growth and those expecting a decrease is the net figure, expressed as a percentage. A positive net percentage indicates growth, a negative indicates decline. Net zero implies no change.
About the Pulse
The Pulse is a monthly trends survey tracking builders’ merchants’ confidence and prospects over time. Produced by MRA Research, the insight division of MRA Marketing, it captures merchants’ views of future prospects in terms of sales expectations, confidence in their business, confidence in the market, and the key issues and problems they experience.
This report is the 40th in the series, with interviews conducted by MRA Research between 1st and 3rd August 2022 (three working days). Each month a representative sample of 100 merchants is interviewed. The sample is balanced by region, size and type of merchant, including nationals, regional multi-branch independents, and smaller independent merchants.
