DIpil Das
UK Retail Sales: April 2021
In April, total UK retail sales soared 35.7% year over year as non-essential stores reopened (on April 12) following months of lockdown closures, leading to the release of pent-up demand. This is in line with our expectations that total sales would see a strong jump in April, with England and the devolved nations of Northern Ireland, Scotland and Wales easing many virus-related restrictions, coupled with the lockdown-driven deep decline in April 2020. Nonfood sectors provided the largest contribution to year-over-year sales growth in April 2021, aided by triple-digit increases for clothing retailers and footwear specialists as well as big-ticket sectors such as DIY and hardware, floor-covering specialists, and furniture and lighting stores.Figure 1. Total UK Retail Sales (ex. Automotive Fuel and Unadjusted): YoY % Change [caption id="attachment_127592" align="aligncenter" width="725"]
Data in this report are not seasonally adjusted Source: ONS/Coresight Research [/caption] While weak comparatives were a major factor in this month’s strong growth, April 2021 saw strong sales by any measure. Comparing to 2019 values, April sales still grew by a healthy 10.6%, up from the 6.2% two-year increase in March.
Figure 2. Total UK Retail Sales (ex. Automotive Fuel and Unadjusted): % Change from Two Years Prior [caption id="attachment_127608" align="aligncenter" width="725"]
Source: ONS/Coresight Research [/caption]
Retail Sales Growth by Sector
The lockdown measures imposed to contain the spread of the virus in April 2020 had a major detrimental impact on retail sales, creating a sharp contrast in growth of essential and discretionary sectors. To control for the effects of the pandemic in 2020’s retail sales figures, we largely compare April 2021 sales to pre-pandemic April 2019 sales in this section.
Small retailers (as defined below Figure 3) strengthened two-year sales growth to 22.6%. Within this category of retailers, small clothing retailers proved to be an exception, as sales by these retailers slid by 30.1% from 2019 values. Large retailers, which account for the bulk of retail sales, also continued their growth momentum, posting total two-year growth of 6.9% in April versus a 5.2% increase in March.
Grocery retail store sales saw a modest 4.4% increase from pre-pandemic values, slowing from their robust 14.8% growth in March and 9.7% increase in February. We expect growth to slow further moving forward, as food-service businesses were allowed to serve indoors at partial capacity from May 17.
DIY and hardware retailers saw elevated growth in April, whether compared to 2019 or 2020: Sales were up 105.7% from 2020 and 35.6% from 2019.
A 216.7% surge in clothing specialists’ sales from April 2020 levels conceals the sector’s below-par performance in April 2021, with sales declining 5.5% from pre-pandemic levels. However, the reopening of the sector led to a strong sequential growth improvement in April 2021 from pre-pandemic values.
Growth at department stores/mixed-goods retailers—a sector also challenged by the pandemic—grew 2.9% compared to 2019. However, the sector did bounce back from especially dire April 2020 sales, growing 37.4% in April 2021 from lockdown-deflated sales a year ago.
Growth at health and beauty sales growth turned positive for the first time in 2021, growing 6.2% in April compared to two years prior.
Figure 3. UK Retail Sales, by Sector: YoY % Change (First Table) and Two-Year % Change (Second Table) [wpdatatable id=976 table_view=regular] [wpdatatable id=977 table_view=regular]
*A small retailer is defined as one with fewer than 100 employees or with revenues of £60 million or less per year; all others are large retailers **A relatively fragmented sector in which reported figures have traditionally been volatile Source: ONS Online Retail Sales Account for 29.4% of All Retail Sales Total online retail sales rose by 31.6% year over year in April, down from a 62.1% increase in March. Internet sales by food retailers particularly saw growth erosion in April, increasing by 17.1% versus 104.9% in March, partly due to annualization of crisis patterns. Nonfood retailers also saw softening of online sales growth, which rose 36.7% year over year, compared to an 80.6% increase in March. Online sales of apparel retailers maintained growth momentum, with an increase of 84.1% in April, compared to 78.7% growth in March. Online sales as a percentage of overall retail sales continued its downward slide, reaching 29.4% in April. That equates to a decrease of 0.9 percentage points compared to online sales penetration in April 2020 and 11.0 percentage points higher than April 2019. Figure 4 charts the trend for total retail, as well as food and nonfood sectors.
Figure 4. Online Retail Sales as % of Total Retail Sales [caption id="attachment_127773" align="aligncenter" width="725"]
“Food” and “Nonfood” data are for store-based sectors; “All Retail” total includes nonstore retail, which is not charted Source: ONS [/caption] Covid-19 Lockdown Timeline Lockdown 1: The UK was put into lockdown on March 23, 2020, initially for three weeks, in an attempt to limit the spread of the coronavirus. Nonessential retail stores were closed. On April 16, the government extended the lockdown by another three weeks. On May 11, Prime Minister Boris Johnson announced that the government would begin easing restrictions in a phased manner, allowing nonessential stores to reopen from the start of June. However, garden centers were allowed to reopen from May 13 and furniture stores from May 23. On May 26, the government announced that all nonessential retailers in England and Northern Ireland—including department stores and small independent shops—would be allowed to reopen from June 15, but stores would need to implement measures to meet the necessary social distancing and hygiene standards. On June 23, Johnson announced that restaurants, pubs, museums, cinemas and hotels could reopen on July 4. On September 14, a new “rule of six” prohibited social gatherings of more than six people, unless they are from the same household. On September 22, Johnson outlined a slew of new restrictions in the wake of a fresh spike in the number of infections. These included the closing of bars, pubs and other hospitality services by 10:00 p.m., effective September 24. On October 7, the Scottish government implemented tighter restrictions, largely on the hospitality industry. Retail was not directly affected, although stores were requested to enforce two-meter distancing. On October 12, the UK government announced a three-tier lockdown system, which classifies regions based on the severity of infection rates. In the week beginning October 19, a number of regions in England, including London and Manchester, moved into higher “tiers” of control, which include restrictions on households mixing and, in some cases, some service industries; however, these did not change the direct rules for retailers. On October 23, a 17-day lockdown began in Wales, with nonessential retailers being forced to close once more. Lockdown 2: On October 31, Prime Minister Johnson announced a second lockdown for England for the period November 5 to December 2. All nonessential retail was forced to close, “including, but not limited to, clothing and electronics stores, vehicle showrooms, travel agents, betting shops, auction houses, tailors, car washes and tobacco and vape shops.” Food shops, supermarkets, garden centers and certain other retailers providing essential goods and services could remain open. Nonessential retail could remain open for delivery to customers and click- and-collect. Hospitality venues such as restaurants, bars and pubs were forced to close but could still provide takeaway and delivery services. Also forced to close were entertainment venues, indoor and outdoor leisure facilities, and personal care services. Following the lockdown, UK regions were placed into different tiers, each of which had different restrictions. On December 8, the UK’s National Health Service started vaccinations, with the aim of vaccinating the most vulnerable groups of people by February 15, 2021. On December 21, the UK government scrapped a planned easing of rules on the mixing of households over the Christmas period. In England and Scotland, households in many areas were banned from mixing; in some areas, households could mix on Christmas Day only. The devolved Welsh and Northern Irish administrations implemented their own restrictions. Lockdown 3: On January 4, 2021, Johnson announced a lockdown in England, effective January 5 and with an unspecified end date but with laws formally expiring on March 31. Scotland, Wales and Northern Ireland also implemented lockdowns. On January 19, Scotland’s First Minister Nicola Sturgeon announced that that country’s lockdown would be extended until at least the middle of February. On January 27, the government announced that travelers arriving from “red list” countries must quarantine in hotels specified by the government. On February 22, the government laid out a roadmap to ending lockdowns in England. Restrictions will start to be eased from March 29, nonessential retail stores and services such as hairdressers will be allowed to reopen from April 12, and final restrictions will be ended on June 21. On March 25, the UK lowered the Covid-19 risk level from four to three on a scale of five. On April 12, the government eased a raft of restrictions across England, with nonessential retail stores allowed to reopen. Gyms, zoos, theme parks, pubs and restaurants were allowed to reopen for outdoor service and shops and hairdressers again permitted to serve customers. On April 20, Sturgeon announced that most areas in Scotland will move to Covid-19 protection Level 3 from Level 4 on April 26, meaning that hospitality venues such as cafés, pubs and restaurants and beauty salons can reopen. On May 17, England eased restrictions further, with groups of up to six people from different households permitted to socialize indoors, pubs and restaurants allowed to serve indoors and entertainment venues such as museums, cinemas and theatres able to reopen.