An economic rebound in retail is nothing but an illusion, according to the British Retail Consortium (BRC).

BRC director general Stephen Robertson says that any sense of improving optimism is not translating into more consumer spending.

In addition, profits for small retailers are being harmed by the need to cut prices. It’s tough for businesses when they are forced into heavy discounting and promotions to lure in cash-strapped consumers, making it harder and harder to maintain healthy margins. With this surfeit of stagnating companies selling cut-price wares to keep their heads above water, it’s hard to see exactly where growth will come from.

Of course, a lot of companies have taken advantage of the age of austerity, hence the rise of discount websites such as Groupon and MyVouchercodes. Lastminute.com founder Brent Hoberman has just launched a site that puts furniture producers directly in touch with consumers, meaning no middlemen and discounts for all. It goes to show that maybe the way forward for new retailers is to have discounting at the core of their offering rather than feeling forced to skew prices when the bottom line can’t take the hit.

Then again, if everyone were to take such an approach, there would still be casualties. Doing things like shortening supply chains to deliver a cheaper product to consumers is clearly never going to be popular in some quarters of the distribution game.

Despite the gloom, there are some who believe we are on the cusp of an improvement in prospects. The British Chambers of Commerce expects UK economic growth to improve gradually from the second half of 2012 onwards, and to strengthen during 2013, culminating in a 1.8 per cent GDP growth in 2013. Let’s hope the forecasts are correct and pave the way for better prosperity and increased consumer spending in the future.

See also: Government plans Business Link revival