Total UK retail sales returned to pre-pandemic levels in July – but clothing sales are still down by 25.7% even though the sector saw double-digit month-on-month growth.
The latest data released today (21 August) by the Office for National Statistics (ONS) shows UK retail sales volumes in July were 3.6% higher than June, and are now 3.0% above pre-pandemic levels in February. Sales values were up 4.4% month-on-month, and were 1.7% higher than February .
But clothing store sales were the worst hit during the pandemic and volume sales in July remained 25.7% lower than February – even with a July 2020 monthly increase of 11.9% in this sector.
A monthly business survey carried out by the ONS showed 96.4% of clothing and footwear stores were trading again in the two weeks to 9 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.
Department stores saw less dramatic falls during lockdown, resulting in smaller growths to recovery. Many department stores selling a range of goods including food reported continued trade to trade over the period, and in July, department store sales were 5.1% lower than their pre-pandemic levels.
Overall, online retail sales fell by 7.0% in July when compared with June, but the strong growth experienced over the pandemic has meant that sales are still 50.4% higher than February’s pre-pandemic levels. For clothing and footwear stores, sales values were up 22.7% year-on-year in July, but fell 11.2% compared to June.
While total retail sales may be recovering in July from the sharp falls during lockdown, the UK economy still entered a technical recession in the second quarter (April to June) of 2020.
Changed consumer behaviour
“July marked another month of progress for the retail sector and an important symbolic milestone as sales climbed above pre-pandemic levels,” notes Lynda Petherick, head of retail for Accenture UK and Ireland. “Recent impressive online sales began to taper slightly, however many retailers will hope that this reflects that normal service may be resuming.
“Nevertheless, the dark cloud hanging over retail remains the threat of further local or national lockdowns, which would wreak havoc on a sector navigating the road to recovery. Retail’s problems predate the pandemic; however the crisis should hasten moves by retailers to optimise their blend of online and physical channels if they are to emerge more resilient in the new retail environment.”
Jacqui Baker, director of retail at audit, tax and consulting firm RSM, believes July’s results “show shopper habits formed during lockdown have become well entrenched.
“The fashion industry has been one of the worst hit by the crisis. With many consumers avoiding beach holidays abroad and unemployment numbers increasing, many are opting to remain cautious by ‘staycationing’ at home or at the great British seaside. Investment in a new summer wardrobe and swimwear has been almost non-existent.
“The continued buoyant performance of online begs the question: has the pandemic converted a demographic of shoppers who would never have previously purchased online? Baby boomers, whilst happy to browse online, have historically preferred the personal engagement of traditional bricks and mortar stores. Yet left with no option during lockdown and with a greater amount of disposable income, it’s these shoppers who are sticking with their newfound habits and influencing the change in sales split.”
Sachin Jangam, associate partner for retail at Infosys Consulting, agrees “consumer behaviour has changed during the pandemic, adding: “Retailers must adapt and stay relevant to stay afloat. Not all success will come from online – the continued popularity of stores like Primark, TKMaxx and Sports Direct shows that in-store engagement still has a lot of potential, if the shopping experience is exciting and unique enough.
“However, these models aren’t easy to replicate. To stay competitive and emerge as stronger organisations, retailers could use digital technologies and data science to optimise their product range to meet current demand.”
Sara Korchmaros, chief commercial officer at the retail technology platform Recash, comments: “No-one should confuse the return of more normal sales figures with normality on Britain’s embattled high streets. Physical stores still look and feel very different, with many wrestling with chicanes and one-way systems that hardly shout ‘come in and browse.’
“Clothes stores in particular have pulled themselves back from the brink of the abyss, but total clothing sales are still an eye-watering 25.7% below their pre-Covid level.
“In the face of such sharp and sustained declines, even bastions of clothing retail are retrenching. Marks & Spencer’s announcement that it is to slash 7000 jobs over the next three months suggests many are digging in for more pain to come.
“The most agile high street brands are now seamlessly blending their digital and bricks and mortar offerings, with physical stores often playing a supporting role to their online counterparts.
“Despite the huge progress made, no-one should expect consumers to spend Britain out of recession. All retailers face a delicate struggle with fragile consumer confidence, and technology which helps them attract shoppers more strategically will become essential not just for growth, but for survival.”