Official figures confirm that retail sales continued to recover during July and actually came in ahead of pre-pandemic levels as pent-up demand was released.
In the first full month that shops selling non-essential goods were allowed to open since lockdown, Office for National Statistics (ONS) data shows retail sales volumes rose by 3.6% between June and July. That meant they were 3% above levels recorded February, just before the WTO declared a pandemic and restrictions started to be introduced in the UK.
However, July’s month-on-month rise was not as pronounced as the previous two months. In May, retail sales had increased by 12% and in June they had risen by 13.9%.
Food and online retailing remained at higher levels, although non-food and fuel still remained lower than in February. Clothing store sales were the worst hit during the pandemic and volume sales in July remained 25.7% lower than six months ago. However, the sector did see an encouraging monthly increase of 11.9%.
Online retail sales fell by 7% month-on-month in July but the channel’s strong growth experienced over the pandemic means that sales are still 50.4% higher than in February.
The retail sector has been one of the worst hit by the lockdown with numerous retailers announcing job cuts in recent weeks.
Ruth Gregory, senior UK economist at Capital Economics, suggested that “the recovery in physical shops was more impressive than the headline ONS figure and that shoppers are starting to return to the High Street”.
Meanwhile, Emma-Lou Montgomery, associate director at Fidelity International, stated that the outlook felt a little brighter for retailers. However, she warned that the pandemic impact was far from over: “With the UK now in a recession and many households likely to be tightening their belts as a result, spending on non-essential items may take a hit in the coming months, particularly as we approach the end of the furlough scheme in October.”
Separate data released today by GfK shows consumer confidence is still weak. Its measure remained at -27, although the research showed consumers had turned a bit more confident about their personal finances and making major purchases. In contrast, people were increasingly concerned about the general economic situation.
Joe Staton, GfK’s Client Strategy Director, commented: “Employment is now the big issue because the pandemic has ended years of job security. Yes, discounted dinners have proved a winner with hungry consumers across the country this month, but it’s difficult to see significantly increased appetite for other types of spending for now.
“While our Major Purchase Index increased by one point in August, it is still in negative territory, and the economic headwinds are not favourable as we enter the key retailing months at the end of the year.”
NAM Implications:
- Obviously important for NAMs to place their own business results within this official context…
- …and also bring personal experience to the mix…
- …against a general background including fearful (job-security, health) encouraging the emergence of a super-savvy consumer…
- …demanding demonstrable evidence of value-for-money.
- If all of the above indicates a return to anything like normal, fingers should still be crossed…
