The health of UK retail is steadily improving, with an uplift in the first quarter expected to be matched in the second.
That's according to the KPMG/Ipsos Retail Think Tank (RTT), which says that while margin and cost both remained flat in Q1 there was an increase in demand. With UK unemployment falling and household wealth rising as a result of a rapidly-improving housing market, confidence has once again returned to the UK consumer, it believes, though it warns that the increases are subdued.

The RTT says "DIY failed to take off quite as expected" in Q1 "but garden centres have benefited from better weather in March.

"Going into Q2, there are signs that UK retail is set to continue delivering positive results. Consumer confidence is now at a seven-year high, based on the GfK consumer confidence index, and the UK may well be the fastest-growing developed market economy in 2014."

Real growth in disposable income, coupled with a confident consumer market, is a strong indicator that demand will not tail off in Q2, the RTT believes. A rise in demand is also expected to take pressure off margins, which could be further protected by measures retailers are taking to improve their pricing architecture.

RTT member James Knightley, senior global economist at ING, commented: "With consumers feeling happier and with more money likely to be in their pockets, 2014 is shaping up to be a better year for retailers."