Sales at clothing and footwear retailers lagged in June, although not all stores had reopened during the month

Sales at clothing and footwear retailers lagged in June, although not all stores had reopened during the month

While total UK retail sales in June appear to have bounced back to pre-pandemic levels, the clothing and footwear sector lags far behind, with sales still down almost 35% from February.

Official data released today (24 July) shows total UK retail sales volumes were up 13.9% compared with May, as non-food and fuel stores continue their recovery from the sharp falls experienced since the start of the coronavirus outbreak. Sales values were up 13.6% month-on-month.

Indeed, figures from the Office for National Statistics (ONS) show the two monthly rises in May and June 2020 have brought total sales to a similar level as before the coronavirus pandemic, with a fall of just 0.6% when compared with February.

However, there is a mixed picture in different store types – with sales at clothing and footwear stores the hardest-hit. 

According to the ONS, the decline in retail sales value in all non-food stores in June is down 15.9% on levels seen in February. But clothing and footwear stores remain down 34.9% from February – with a 26.8% rise online unable to offset a 50.8% drop in store sales.

The value of sales at department stores is down just 5.2% compared with February, with store sales falling by 28.3%, and online sales surging by 111.3%.

Government restrictions meant non-essential stores – including most of those selling clothing and footwear – were closed from mid-March, and only started trading again in June 2020.

A monthly business survey carried out by the ONS showed 51.9% of clothing and footwear stores were trading in the two weeks from 1-14 June, but this rose to 73.1% in the second half of the month.

Picture remains mixed

"Whilst total value sales, including fuel, remain below year-on-year comparables, consumers appear to be emerging from lockdown slowly but cautiously," says Ian Geddes, head of retail at Deloitte.

"For both food and non-food sectors, the challenge will be maintaining the pace of returning consumers. Online sales as a proportion of overall sales remained high in June, at 31.8%. With consumers having experienced the convenience of online shopping during lockdown, some retailers will be focusing once more on their in-store experience in the 'new normal'."

Lynda Petherick, head of retail for Accenture UK and Ireland, notes: "June marked another important step on the long road to recovery for the retail sector. As the government takes steps to stimulate the economy and lift consumer sentiment, we're seeing a welcome boost for physical store sales, although the picture remains mixed. 

"At the same time, online sales remain well above pre-pandemic levels, meaning it's the brands which have worked on their e-commerce offer these last few months that will emerge stronger as lockdown lifts."

Significant pressure

"The retail sector bounced back as the reopening of shops released pent-up demand for some retailers. But the recovery is being felt unevenly across the sector with clothing retailers remaining under significant pressure," says Richard Lim, CEO at research consultancy Retail Economics.

"Some consumers searching to break the monotony of being at home headed for the high street, but numbers remained considerably lower than pre-Covid levels.

"We continue to witness an extraordinary shift towards online shopping. A sizeable proportion of consumers are shopping for products online which they had previously only ever purchased in-store. Many are breaking through the initial barriers of setting up online accounts, entering payment details and overcoming issues of trust. It's inevitable that these behaviours will become permanent for some, leading to a step-change in the proportion of online shopping going forward. 

"As the mandatory wearing of face masks comes into play [from today], it will only create more friction for shoppers. Our research shows that 30% of consumers feel it will lead them to visit shops less frequently adding another hurdle on the road to recovery for the sector."

Lee Lucas, principal and CEO of the Fashion Retail Academy, adds: "Since all non-essential retailers were only allowed to open their doors in mid-June for the first time since March, it's extremely encouraging to see a monthly bounce, reflecting consumers' eagerness to get back to the high street. 

"Although they are not quite back to pre-pandemic levels, high streets all over the country are getting busier by the week, with shoppers relieved to be able to return to physical stores and make the most of the summer promotions currently on offer.

"Retailers will be keeping a nervous eye on footfall over the next few weeks to see if compulsory face mask-wearing has any impact. However, it could work in shops' favour. Compulsory mask-wearing will help entice those customers who are more nervous back to the high street, reassured by the fact they know all shoppers will be taking precautions."

Staying afloat

Jacqui Baker, director of retail at audit, tax and consulting firm RSM, says: "Ultimately, online spending is here to stay, and these statistics lay bare the fact that traditional UK bricks and mortar stores continue to bear the brunt of Covid-19. 

"Sales are heading in the right direction, but these increases are a fraction of where they need to be. 30 September is a critical date for retailers as it sees the end of the rent moratorium, Coronavirus Business Interruption Loan Scheme and the last embers of the furlough scheme.

"The all-important Christmas quarter will be crucial for these businesses and the Government will need to get behind them or risk the prospect of ghost-town high streets in 2021."

For Sachin Jangam, associate partner for Retail at Infosys Consulting: "Retail sales have finally reached similar levels to before the pandemic – which is a lifeline for the sector. Without a doubt, this is the most challenging time retailers have ever faced in their history. Retail businesses typically operate on 3-5% margins, but with store traffic still down 30-40%, they have had no alternative but to optimise their cost base."

Staying afloat and staying relevant is the need of the hour. 

"Some retailers are known for the shopping experience they provide. These retailers – like TKMaxx and Primark – have carved out a niche to fend off online competition, unique as brands that can continue growing on in-store engagement alone. These models aren't easy to replicate, so we will see Primark and TKMaxx capitalise on the opportunity to capture cheaper retail space and push ahead with store expansions to grow even further.

"To compete, other stores need to provide category-focused weekly offers to excite customers, and communicate these promotions regularly to maintain traffic. This will help to increase footfall and drive sales. 

"Staying relevant, and focusing on the right technology investments and innovations, will be the key to success amid such uncertainty. That said, retailers will also rely on high street-friendly government policies to help them survive."