Overall retail sales were up again last month but the rate of growth eased as pent-up consumer demand post-lockdown started to ease.
The Retail Sales Monitor data from the British Retail Consortium (BRC) and KPMG shows total retail sales were up by 3% year-on-year in August compared with a 6.4% increase seen in July.
Over the three month period to August, food sales increased 2.9% on a total basis and by 1.9% on a like-for-like basis – below the 12-month total average growth of 5.4%.
Susan Barratt, Chief Executive of IGD, commented: “Food and drink sales in August were broadly flat on 2020’s performance, with some spending switching from retail back into the out-of-home sector.
“Despite sales being limited by the dull weather, they were supported by staycations and the late summer Bank Holiday, which helped sales show a small amount of growth.”
In-store sales of non-food items grew 23.7% on a total basis, which was slightly above the 12-month average growth of 21.7%.
Meanwhile, as shoppers returned to physical stores, online non-food sales fell by 4.6% last month, with 38.3% of sales now online compared to 42% during the same month a year earlier.
Helen Dickinson, Chief Executive of the BRC, commented: “As the post-lockdown pent-up demand has mellowed, the growth in retail sales we have seen over the past few months slowed for August. Despite this, the month still saw growth above pre-pandemic levels, as rising consumer confidence and footfall levels led to a boost in in-store sales.”
She added: “While online sales have begun to slow, they were still high, demonstrating how the pandemic has shifted the digital-physical shopping balance.
“With demand waning, combined with a precarious economic backdrop and retailers grappling with higher costs across the supply chain, the number of shuttered stores in the UK will continue to rise.”
Meanwhile, Don Williams, Retail Partner at KPMG, said: “With the retail recovery showing signs of slowing, the sector is expected to grow at a more muted rate as retailers face increasing challenges on a number of fronts.
“Inflation is expected to accelerate, putting pressure on household spending, whilst retailers battle for share of wallet as consumers spend money on leisure, entertainment and travel.
“Staffing pressures remain and supply chain issues are being widely reported, with raw material shortages and challenges getting product into the UK and getting goods into customers’ hands. This may feed into limited availability of certain products and the spectre of price rises remains.”
NAM Implications:
- Pent-up consumer demand was ‘pent up demand’ and was bound to ease post-lockdown.
- i.e. no surprises there…
- Key will be underlying real growth momentum….
