DIpil Das
UK Retail Sales: August 2021
In August, total UK retail sales extended its downward trend, growing by a modest 1.4%, down from a 2.8% increase in July. The growth slowdown in August was partly due to stronger comparatives from August 2020 and a mellowing of pent-up demand and diversion of consumer spending from retail to the hospitality and leisure sectors after pandemic restrictions ended in July 2021. Total growth was impacted by a reported decline in small retailers’ sales. Large retailers, which account for the bulk of retail sales, saw modest gains of 3.1%, following a 5.3% increase in July. We expect the spell of deceleration in total retail sales growth to continue until November, as we cycle through demanding comparatives from last year.Figure 1. Total UK Retail Sales (ex. Automotive Fuel and Unadjusted): YoY % Change [caption id="attachment_132795" align="aligncenter" width="726"]
Data in this report are not seasonally adjusted Source: ONS/Coresight Research [/caption] Against the more consistent comparatives of 2019, August’s retail sales growth stayed flat with July, after shrinking for two consecutive months.
Figure 2. Total UK Retail Sales (ex. Automotive Fuel and Unadjusted): % Change from Two Years Prior [caption id="attachment_132801" align="aligncenter" width="726"]
Data in this report are not seasonally adjusted Source: ONS/Coresight Research [/caption] Retail Sales Growth by Sector The lockdown measures imposed last year had a major detrimental impact on retail sales, causing certain sectors to see dramatic sales declines and skewing year-over-year growth numbers. To control for the effects of the pandemic in 2020’s retail sales figures, we largely compare August 2021 sales to pre-pandemic August 2019 sales in this section. Grocery retail store sales growth slowed to 3.7% from pre-pandemic values, following a 4.1% increase in the previous month—reflecting the continued shift of food spending from at-home to on-premise consumption. OpenTable data showed an increase in online restaurant reservations in August. DIY and hardware retail sales remain strong, growing 30.3% on a two-year basis in August, after a 20.6% increase in July. Furniture and lighting stores saw sales growth of 16.8% from 2019—though strong, this was weaker than July’s 32.6% rise. Declines in clothing and footwear retail sales were consistent with those seen last month. Clothing retailers’ sales declined by 9.4% on a two-year basis in August, after a 10.3% decrease in July. Similarly, footwear retailers saw sales decline by 17.7%, in line with the 17.2% decrease seen in July. Department stores—a sector particularly challenged by the pandemic—saw sales declines deepen in August: Sales declined by 5.5% in August from 2019 levels, after a 3.7% decrease in July. Sales growth in the health and beauty sector saw an uptick, increasing by 5.9% in August compared to 3.4% growth in July on a two-year basis.
Figure 3. UK Retail Sales, by Sector: YoY % Change [wpdatatable id=1268 table_view=regular] [wpdatatable id=1269 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 Fall, Accounting for 25.5% of All Retail Sales Total online sales growth stayed negative, declining 4.3% year-over-year in August, after a 7.4% decrease in June. Food retailers’ e-commerce sales declined by 0.1% in August, close to July’s underwhelming growth of 0.7%. According to Kantar Worldpanel, the market penetration of online grocery fell to 12.2% for the four weeks ended September 5, its lowest level since May 2020, as shoppers continue to divert their spend back in-store. Nonfood retailers’ sales saw negative growth for the third consecutive month, falling 3.7% in August, a slight improvement on the 5.9% decrease in July. Apparel retailers’ online sales saw year-over-year growth moderation, increasing by only 1.7% in August after 7.0% growth in July. As shown in the figure below, online sales as a percentage of overall retail in August stayed flat with June after trending downwards for six consecutive months. This metric reached 25.5% in August, level with July, but 7.4 percentage points higher than August 2019.
Figure 4. Online Retail Sales as % of Total Retail Sales [caption id="attachment_132802" align="aligncenter" width="724"]
“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 raft of restrictions across England, with gyms, zoos, theme parks, pubs and restaurants allowed to reopen for outdoor service and shops and hairdressers again permitted to serve customers. On April 20, Sturgeon announced that Scotland will move to Covid protection Level 3 from Level 4 on April 26, meaning 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 allowed to socialize indoors, pubs and restaurants can serve indoors and entertainment venues such as museums, cinemas, and theatres can reopen. On June 14, England delayed the final stage of easing lockdown restrictions by month, until July 19, due to the increase in cases of the more transmissible Delta variant. After more than a year under some form of restriction, England lifted almost all remaining Covid-19 rules on July 19, 2021. This included the opening of nightclubs and lifting capacity restrictions on big events and performances.