Sales at UK clothing retailers partially bounced back in May, with the sector seeing online retailing soaring to record levels as most stores continued to remain closed.
Official data released today (19 June) shows total UK retail sales volumes were up 12% compared with April, when sales fell by a record 18.1% – the first full month of lockdown.
But retail sales were still down by 13.1% on February before the impact of the coronavirus (Covid-19) pandemic, according to the Office for National Statistics (ONS).
And in the three months to May 2020, the volume of retail sales dropped by a record 12.8%, with declines across all stores except food and non-store retailing, the ONS said.
Gains in May were led by the re-opening of some non-food stores such as hardware stores. Department stores were the least affected by the store closures in March and April, since some sell a significant amount of essential goods, including an element of food. This meant that department stores saw a sales increase of 13.8% in May – returning to similar levels seen in 2014.
The ability to trade online pushed the proportion spent online in May to 33.4%, the highest proportion on record. For clothing and footwear stores, online retailing also reached record levels during the month, accounting for 49.4% of sales values.
Difficult balancing act
“Retail sales continued to struggle in May, despite both values and volumes rising by 11.8% and 12% compared to April,” notes Ian Geddes, head of retail at Deloitte.
“In a month that saw two bank holiday weekends, some easing of outdoor social gatherings, and warmer weather for many, retailers may have been looking for the first green shoots of recovery to make up for lost ground in March and April.”
He believes online demand is likely to have been driven by “clothing items, as many consumers continue to work from home, with an increased requirement for video conferencing and a more relaxed ‘work’ wardrobe.”
Looking ahead, “as non-essential retailers begin to phase-in store reopening plans, some consumer anxiety will remain. During lockdown, consumers have pivoted to fewer but bigger food shops. Whether this trend will also translate into non-food remains to be seen.
“For retailers, there are two options: a difficult balancing act between re-creating a familiar shopping experience whilst implementing and maintaining strict new hygiene practices, or innovating and re-inventing the shopping experience for a post-Covid-19 world.
“Deloitte data shows that 46% of UK consumers currently feel safe visiting a store, but building on this confidence will be key for drawing more shoppers back to the high street over the coming months.”
New consumer habits
With online booming to a record proportion of retail sales spending in May, Jacqui Baker, director and retail specialist at RSM, notes: “It’s clear that consumers have formed new habits and it will be interesting to see how many shoppers will return to the high streets from 15 June.
“The figures added to hopes that the economic recovery will be faster than predicted following April’s record low sales figures. The resumption of non-essential retail on Monday (15 June) will play a crucial role in kick-starting the UK’s economy after figures from the ONS last week showed GDP decreased by a record 20.4% in April.
“With the Government Covid-19 support strategies starting to fall away, huge costs to implement social distancing measures, low footfall and uncertain consumer confidence, retailers need ongoing support from landlords and funders to keep their physical stores open.
“June is seen as a crucial month in determining if the euphoria surrounding the reopening of the high street translates into spending at the tills. This week’s press certainly suggests that many consumers are eager to return to the shops with images of long queues outside some stores. However, the reality is that the bargain hunters fizzled out after day one and footfall is still down 55% on last year. Strict social distancing measures and low-consumer confidence are certainly taking their toll.”
Back and booming
“It has been a long and challenging few months for high street retailers, but it’s encouraging to see that today’s figures show a healthy rebound from last month’s record drop in retail sales,” says Lee Lucas, principal and CEO of the Fashion Retail Academy.
“Clothing stores were one of the biggest winners of May’s rebound and as a result, non-food stores provided the largest contribution to overall growth in May.
“Industry leaders used the past few months of closure to plan for social distancing, hygiene and incentives to attract shoppers back, and those plans have now been put into action with stores reopening all over the country.
“The queues we saw on high streets this week shows that many shoppers have missed the in-store experience, and were keen to enjoy some retail therapy after months stuck at home.
“With shoppers demonstrating they are willing to return to physical stores, retailers need to make the most out of this situation and ensure this momentum continues.
“Proactive engagement with customers via digital channels about in-store offers and discounts, along with demonstrations of how they are enabling social distancing and keeping staff and shoppers safe, will be critical to encouraging return visits.
“It’s critically important that retailers who don’t have an online presence at all find a way to drive those who are more nervous about returning to public spaces back to the high street.”
Online sales reach new heights
“A seismic shift towards online pushed this channel to new heights,” comments Richard Lim, CEO at Retail Economics. “Retailers have been working tirelessly to boost their online capacity to cope with this intense period of demand. Those with the most flexible operating models and who have been fleet-of-foot are retaining customers and reaching out to a new wave of online converts.
“Many consumers are shopping for products they had previously only ever purchased in a shop. They are overcoming the initial barriers of setting up online accounts, entering payment details and gaining trust. This shift in behaviour will inevitably be sticky for a large proportion. The critical question retailers will be asking themselves is how long-lasting the shift will be.
“The industry remains in survival mode. Our research showed 8 in 10 retailers are considering making redundancies while half are considering store closures in a range of cost-saving measures. As they take a forensic look at their cost base, other areas of consideration also include lease renegotiations (68%) and review of supply contracts (63%).
“As the government begins to withdraw support for businesses and households, the true cost of the pandemic will begin to emerge.”