UK retail improves for first time in two years

But the RTT expects to see it flatline in Q2 as market conditions toughen.
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Retail Think Tank has reported that the health of UK retail has improved for the first time in two and a half years.

The review reports an upward turn in Q1 compared to 2011/2012.

Improving by one point, the RTT's Retail Health Index has moved up to 77 points.

However, the report also states that UK retail's health is expected to flatline in Q2 2013, with market conditions expected to toughen.

And overall costs for Q1 remained flat, with some multi-channel elements increasing and others decreasing at the margin - leading to mixed conclusions.

Retailers’ margins remained under pressure over the quarter. The RTT said that while food margins remained broadly flat and extra discounting was necessary to stimulate clothing sales in particular, some major players remained heavily promotional-led in the quarter.

David McCorquodale, head of retail at KPMG UK, said: "Overall the quarter was quite an even one for UK retailers as demand, margins and costs all remained relatively static and it looks like we're at the bottom of the decline.

"The weather did affect demand in terms of footfall being down, but otherwise sales were largely OK.

"Retailers are trying not to bring their prices down and hold their margins, and we are seeing businesses being better run as they look to take unnecessary costs out of the equation in a more sustainable way."

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