Sales keep creeping up ‘but retail not out of the woods yet’

In August, the value of retail sales increased by 0.7 per cent, while the volume of sales was down 0.8 per cent compared with the previous month.

The latest Office for National Statistics report showed that when compared with the previous three months, a stronger rate of growth was seen in the three months to August, at 16.4 per cent and 16.7 per cent for value and volume sales respectively.

The only measure to show a decline was value sales in the three months to August, when compared with the same three months a year ago – down 0.6 per cent.

Despite total levels of sales increasing to above pre-pandemic levels, the Coronavirus has changed the shape of the retail industry, noted the ONS.

Total retail sales volumes decreased by 4.8 per cent up to August, as all sectors except for food and non-store retailing saw a fall in sales. Food stores increased by 4.4 per cent and non-store retailing showed strong growth at 28.6 per cent when compared with January.

From March, consumers shifted to spending in essential food stores and online retailers as many stores within non-food retailing faced temporary closures.

Total non-food stores fell by 18.2 per cent, with a strong decline of 30.1 per cent for clothing stores.

The highest percentage of businesses reporting decreased footfall were textile, clothing and footwear stores at 85.7 per cent. As expected, the lowest percentage of businesses affected by decreased footfall were non-store retailing at 9.1 per cent.

A further 51.5 per cent of food stores reported a decrease in footfall from 10 to 23 August, which may have been down to other parts of the economy reopening, such as restaurants and bars.

Hardware, paint and glass stores showed a sharp rate of recovery in May with a growth rate of 58.6 per cent when compared with April; which resulted in August’s sales being 12.9 per cent higher than February.

The ONS stated that this may have been because of the exemption of these stores to the lockdown rules imposed on other non-essential store types.

In August, the proportion of online spending was at 28.1 per cent – a slight fall from the 28.9 per cent reported in July. The release also pointed out a decrease in the value of online retail sales when compared with July, down 2.5 per cent.

Despite the monthly decline in online retail sales in August, sales were still 46.8 per cent higher than February’s pre-pandemic levels.

Mona Bitar, UK and Ireland consumer leader at EY, said that her firm’s own research backs up the continued shift towards online shopping, with 43 per cent of UK consumers saying they will shop more online for products previously bought in stores in June, compared to 17 per cent in May.

“Despite this more positive news, it is clear that retailers are not out of the woods yet. Their real challenge now is to examine how they link physical shopping to the online experience – providing a single, seamless customer journey.

“The shift online has resulted in many operational difficulties for retailers, and for most it has come at a cost,” she continued, adding: “How to turn the online demand into profitable growth will be the holy grail.

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