UK retail not out of the woods

Retail in the UK is not out of the woods, indicates British Retail Consortium (BRC). In May 2020, retail sales decreased by 5.9%, against a decrease of 1.9% in May 2019.

Over the three months to May, in-store sales of non-food items declined 50.3% on a total and 21.9% on a like-for-like basis (excluding temporarily closed stores). During the same period, food sales increased 8.7% on a like-for-like basis and 5.6% on a total basis. This is higher than the 12-month total average growth of 2.1%.

Over the three-months to May, non-food retail sales decreased by 2.1% on a like-for-like basis and 21.8% on a total basis. This is below the 12-month total average decline of 6.4%. On the other hand, online non-food sales increased by 60.2% in May, against a growth of 4.4% in May 2019. This is above the 12-month average growth of 12.9%.

Also read: UK consumers to spend more locally

“May presented yet another testing month for retailers, with total sales down by 5.9%. The decline is less drastic when compared to April’s fall of 19.1%. However, we are comparing performance to the record low of May 2019,” observed Paul Martin, UK head of retail, KPMG.

“Sales in May demonstrated yet another month of struggle for retailers across the country, despite an improvement on the previous month,” stated Helen Dickinson, chief executive, British Retail Consortium. “As restaurants lay dormant, food sales rose with consumers taking to their local parks for BBQs and picnics. Clothing and beauty sales improved slightly on April, as people left their homes to meet outside with friends and family. Continuing the lockdown trend, office supplies, fitness equipment and bicycles all performed well, due to strong online sales and DIY was boosted by the opening of garden centres. However, for those shops whose doors remain shuttered, it was once again a tough month and even those who stayed open suffered reduced footfall and huge costs implementing social distancing measures.”

“While the month showed record growth in online sales, many retailers will be anxious to see whether demand returns to our high streets when non-essential shops reopen from June 15. Weak consumer confidence and social distancing rules are likely to hold back sales. Furthermore, there are concerns that if government support is withdrawn too quickly, shops and businesses will not survive. Until the situation improves, retailers urgently need support on rents and negotiations with their landlords as high fees could force some physical retailers to shut for good,” she added.

“As restrictions ease, retailers have much to consider during the pandemic’s recovery phase. Stores may soon have the green light to re-open but it will be a gradual affair with safety front of mind, and some doors may not reopen at all. COVID-19 has acted as an accelerant in the shift towards having less of a physical presence, not least due to the obvious need to radically reduce costs for survival. We’re also witnessing historically high levels of sales transacted online, currently over 60%, and while this will ease as more stores open, consumers have formed new habits that will see the online channel continue to be more prominent going forward,” Martin concluded.

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