Retail sales in August were at their highest since the start of the pandemic, boosted by online spending. However, high street stores continued to struggle as footfall in city centres remained low due to the lack of commuters and tourists.
Data from the latest BRC-KMPG Retail Sales Monitor shows retail sales in the UK increased by 4.7% on a like-for-like basis and 3.9% on a total basis compared to the same month a year earlier.
This is the third month in a row of growth following the reopening of most stores in June. However, the sector has still yet to make up for trade lost during lockdown and it is online rather than bricks & mortar shops that have led the way.
“Remote working has continued to help sales in home goods, such as food, computing, furniture and TVs,” said BRC Chief Executive Helen Dickinson.
“Lockdown also appears to have permanently changed some consumers’ shopping habits, with online sales continuing to boom despite shops reopening in June. Meanwhile, city centre retailers continue to be devastated by low footfall and poor sales, as office workers stayed away for yet another month.”
Dickinson highlighted that clothing, footwear and beauty retailers have “struggled” the most as a result of lower high street footfall.
She suggested that with September quarter rent payments looming, many firms were “hanging on by a thread”, with more store closures and job losses in the sector likely unless office workers start returning in greater numbers to town and city centres.
Meanwhile, Paul Martin, head of retail at KPMG, highlighted that economic uncertainties, including the unwinding of the government’s furlough scheme, could see many consumers “thinking carefully about their spending priorities”.
Separate figures released by Barclaycard today showed that wider consumer spending, which includes sectors such as pubs, restaurants, and travel, as well as retail, was up by 0.2% last month, the first rise since before lockdown in February.
Spending on essential items grew by 5.1% during August, largely driven by supermarket shopping which was up 14.9%, while consumer spending in pubs and bars climbed 9.3%. Purchases of non-essential items still fell by 1.6%, but this was the smallest fall since the onset of lockdown as shoppers became more comfortable visiting stores.
In a positive sign for the retail sector, clothing saw growth of 0.3%, the first increase since March 2019, as shoppers took advantage of end-of-season sales. Spending at department stores also saw improvement, with the smallest drop (-3.6%) in the category since February 2020.
However, the data also confirmed the shift towards online shopping. The highest category increases were seen across supermarkets, which showed a 102.7% year-on-year jump last month as the popularity of food deliveries continued, and online clothing, which grew 24.3%.
Raheel Ahmed, head of consumer products at Barclaycard, commented: “It’s encouraging to see the first uplift in spending after such a turbulent time for retailers. It seems the final throws of summer have spurred households to get out and about with clothing stores, pubs and bars welcoming growth for the first time since lockdown began.
“However, despite the high-street showing some signs of recovery, challenging times still lay ahead in certain sectors. Months of lockdown has helped accelerate the trend towards digital, with surges in areas such as online ordering of takeaways and buying groceries online, meaning the road to recovery may still be a long one for bricks & mortar stores.”
NAM Implications:
- Non-essential retailers designed for pre-lockdown traffic…
- cannot survive social distancing and maintain profitability.
- (accepting that online nets less than traditional retail)
- Meanwhile, ‘artificial’ transfusions i.e. furlough payments, rent and rates holidays…
- …are simply delaying the inevitable.
- NAMs need to take a long (not too long) hard look at their customers…
- …and act before someone does it on their behalf.
