UK retail sales continued to recover in March, with clothing stores recording the strongest growth as consumers updated their wardrobes ahead of the easing of lockdown restrictions. But sales in the sector still remain 41.5% below pre-pandemic levels.
The latest data released today (23 April) by the Office for National Statistics (ONS) shows UK retail sales volumes rose 5.4% month-on-month in March. Sales were 1.6% higher than February 2020 before the coronavirus pandemic took hold.
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By GlobalDataDespite the strong figures, retail sales for the quarter were subdued: in the three months to March 2021, retail sales volume fell by 5.8% when compared with the previous three months, with strong declines in both clothing stores and other non-food stores as a result of the tighter lockdown restrictions.
Clothing retailers reported the strongest growth in sales volumes in March, with sales up 17.5% on the month before. However, sales volumes remain 41.5% below the level in February 2020 before the pandemic began.
Online spending, meanwhile, was up 0.6% on February, with strong growth in textile, clothing and footwear stores of 10.9%. This was the largest monthly growth in the sector since June 2020.
The proportion of online retail decreased in March to 34.7%, down from 36.2% in February, but still remains far higher than the 23.1% reported in March 2020.
Cautious promise
Ian Geddes, head of retail at Deloitte, notes the just-released figures offer the first year-on-year comparisons since the start of the Covid-19 pandemic.
“With non-essential shops closed in March, as they were at the end of March 2020, it is hugely encouraging to see sustained momentum as total sales continued their steady growth.
“As expected, consumers continued to shop online for new purchases in the absence of physical stores, this month accounting for 34.7% of all retail sales, slightly down from the previous month but still considerably higher than March 2020. After an exceptional year for the industry, replete with its own challenges, this is an encouraging indication of the store coming. Whether the level of online spending will be sustained over the coming months remains to be seen but, for many consumers, online shopping has become as convenient as the physical store experience.
“With the UK recording its warmest March day in over 50 years, the arrival of spring sunshine was perfectly timed with new season collections, giving clothing and footwear sales a small boost. Eagle-eyed consumers may have even spotted the re-appearance of some 2020 collections, as retailers brought back stock impacted by the UK’s first lockdown. This is unlikely to put off consumers, however, many of whom have been buying fewer new products in an effort to adopt a more sustainable lifestyle during Covid-19 pandemic.”
Jacqui Baker, partner and head of retail at RSM, concurs, noting March retail sales show cautious promise as the roadmap out of lockdown begins to unwind.
“Retailers will be glad to see month-on-month growth as a steady upward trend continues. A positive sign, but there’s still some way to go before the market recalibrates post-lockdown and retailers can begin to reforecast as new consumer buying habits emerge.
“With kids back to school in early March and outdoor gatherings permitted, even beleaguered clothing and accessories retailers saw an uplift in sales as consumers prepared for the first stages of reopening. This will come as a relief to many retailers as this week’s ONS Consumer Price Inflation Index revealed extended discounting into March as the industry tried to offload unsold stock before the next season drops.
“Online penetration dipped marginally but remained strong in March but April is where we’ll begin to see if the split between online and bricks and mortar begins to plateau.”
Meanwhile, Lynda Petherick, head of retail for Accenture UK and Ireland, adds that after a year of near-endless lockdowns, there is now a palpable sense of excitement among retailers and shoppers alike as the nation gears up for a cautious return to normality.
“While March saw some gradual easing of social restrictions and encouraging sales growth, it will be April’s figures, which will factor in non-essential retail reopening, that retailers will be waiting for with bated breath. Naturally, retailers’ hopes are high for pent-up consumer demand being unleashed around this milestone, but the need to create both a safe and engaging in-store experience as they open their doors will be paramount.
“With online spending figures for February and March continuing to reach all-time highs, we expect demand for online to remain strong post the reopening of non-essential retail. Though retailers will be keen to capitalise on the return of shoppers to the high street, they must also strike a balance across both their physical and digital offering, or risk losing out to competitors that learned strategic lessons from the pandemic.”
