UK retailers enjoyed a fifth consecutive month of sales growth in September, but while clothing sales continue to rise they are still down on their pre-pandemic level.
The latest data released today (23 October) by the Office for National Statistics (ONS) shows UK retail sales volumes in September were 1.5% higher than August, and are now 5.5% above pre-pandemic levels in February. Sales values were up 1.4% month-on-month and were 3.9% higher than February.
However, clothing store sales were the worst hit during the pandemic and volume sales in September remained 12.7% below February, the month before lockdown began. This compares to a 15.9% margin in August.
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.
A survey examining the business impact of Covid-19 carried out by the ONS showed the largest percentage of stores reporting a decrease in footfall due to the pandemic were those selling textiles, clothing and footwear. 65.4% of businesses in the sector said footfall in the two-week period from 7 to 20 September was down in comparison to normal expectations for this time of year.
Online retail sales, meanwhile, fell by 1.2% in September when compared with August. Despite monthly declines across all sectors except department stores, the proportion of online sales was at 27.5%, compared with the 20.1% reported in February. For clothing and footwear stores, sales values were up 27.7% year-on-year in September, but down 1.7% compared to August.
A “difficult and unconventional” end to the year
“Growth in retail sales is beating even the most optimistic expectations,” notes Richard Lim, CEO of Retail Economics. “Consumers have proved extremely resilient as cancelled holidays, fewer trips out and less commuting have boosted discretionary spending power to the benefit of some parts of the retail sector.
“Christmas 2020 is going to be like no other and we’re also likely to be seeing signs of consumers starting their Christmas shopping earlier. It’s not hard to imagine scenes of queues outside of shopping centres (limiting shopper numbers), queues outside shops, queues inside shops, and frustrated shoppers. It’s much harder to quantify the impact that this will have on the physical retail capacity and supply.
“The industry simply isn’t capable of satisfying Christmas demand if too much shifts online. And with these scenes in mind, there’s every chance demand outstrips supply without some innovative and creative thinking from retailers, landlords and Government.”
Ian Geddes, head of retail at Deloitte, adds September’s figures will be a welcome boost to retailers that continue to navigate through the ongoing crisis.
“Retail sales in September rebounded beyond pre-pandemic levels, as both month-on-month values and volumes recovered to 1.4% and 1.5%, respectively. Despite a tumultuous six months, September’s sales also mark a year-on-year improvement, up 3.4% by value.
“Non-food sales saw some month-on-month growth, up 3.8% in value, recovering to beyond February’s pre-lockdown levels, as the start of the academic year helped maintained growth, with pupils headed back to school and students re-embarking on university life.
“Online trade, whilst slowing by -1.2% this month, remains 53% above year-on-year comparables, with web orders accounting for 27.5% of overall retail sales. As the nine-week countdown to Christmas begins, retailers will be keen to maintain online momentum and ensure distribution can continue to cope throughout the festive season. As a result, we may see earlier-than-ever discounting from retailers, enticing consumers to spread out their Christmas shopping and thereby stage demand over a longer, more manageable period. For some retailers, Black Friday will be an important supply chain ‘dress rehearsal’ for an increasingly online Christmas.”
Lynda Petherick, head of retail for Accenture UK and Ireland, adds there’s no doubting that UK consumers have been doing their bit to boost the economy, following a quarter of record retail sales growth.
“There’s little time for retailers to gather breath, though, and they will already be wondering – or perhaps dreading – what lies ahead in Q4.
“This should be a time for excitement as the crucial ‘golden quarter’ for retail is now underway. However, with lockdown measures across the UK tightening by the day, retailers are braced for a difficult and unconventional end to the year.
“The months ahead will be different from previous years – retailers are already encouraging people to shop online and to shop earlier than usual ahead of Christmas. It’s up to brands to adapt and implement strategies that reflect changing consumer behaviours, such as catering to more responsible purchasing or creating virtual experiences to work alongside, or even replace, their usual in-store experience.”
Lee Lucas, principal and CEO of the Fashion Retail Academy, meanwhile, says September has provided a lifeline for many retailers heading into their busiest and most important time of year.
“Black Friday is just around the corner, and some fashion retailers are trying to get ahead of the curve by discounting early. Stores are pinning their hopes on shoppers being lured in by sales even before Black Friday, to further make up for revenue lost during lockdown.
“In the same vein, we can expect to see Christmas activity beginning earlier than ever this year. Hopefully, this will minimise the impact of ongoing social distancing measures and help retailers get back on track quicker, giving them a surer footing heading into 2021.”