Hopes of October’s retail recovery continuing into the key festive season have been dashed by the second lockdown and a lack of clarity over Brexit.
This was the view of accountancy and business advisory firm BDO as it published the latest figures from its High Street Sales Tracker (HSST). Total in-store like-for-like sales fell by 27.7% during October from a marginally positive base of +0.7% in the same month last year. But with non-store like-for-like sales rising by 86.0% to the best result since June, total LFLs (combined in-store and non-store) ascended into positive territory (+1.6%) for the first month since January.
However, BDO stated that this boost risks being undermined by the devastating financial impact of a new month-long lockdown in England. With another closure of non-essential shops, the high street is set to miss critical weeks of Christmas trading.
Each sector recorded a negative in-store result in October. Lifestyle in-store like-for-like sales plunged 19.8% from a negative base of -1.9% last year. The result marks nine straight months of negative like-for-like sales for in-store lifestyle, despite recording one of the best weekly results since March in the second week of October.
Fashion in-store like-for-like sales also suffered a nosedive, falling by 36.2% in October. The result is the eighth month of negative like-for-like sales for in-store fashion this year and marks the worst result for the category since July.
Homeware ended its good run, as in-store like-for-like sales for the sector dropped 6.4% this month, but from a strong base of +6.6% last year. Ending a three-month run of either positive or flat like-for-like sales, four weeks of falling like-for-likes during the month confirmed a negative result for October.
Sophie Michael, Head of Retail and Wholesale at BDO LLP, said: “October, while difficult, saw green shoots for the high street and signs of renewed consumer spending. A new lockdown that includes the closure of non-essential shops, however, coupled with ambiguity around Brexit, and little time for adaptation, has poisoned any potential recovery. This has landed retailers in a worst-case scenario in the middle of the critical golden quarter.
“High street brands have spent significant sums to ensure their stores are COVID-secure and build consumer confidence to shop in-store; investment that may now feel wasted.
“New lockdown measures will only add to the woes of many struggling retailers. The accelerated shift online has forced retailers to focus on their online channel and operational logistics, and the closure of stores will inevitably lead to an even faster shift to online. Many may find that their infrastructures are just not there to cope with all sales going through this single channel at a time of peak seasonal trading.
“As 2020 comes to a close, the high street will be banking on consumer resilience, but the reality may consist of spiralling confidence and a chaotic end to an already dire year for retail.”
NAM Implications:
- Add to this the fact that the government cannot simply switch ‘non-essential’ retail on again, in time for Christmas.
- i.e. anticipate a Christmas ‘wipe-out (possibly terminal) for many businesses…
- …as we tentatively step into 2021.
- Time to realistically apply these ideas to your trade strategies.
