albert Chan
UK Retail Sales: June 2021
In June, total UK retail sales growth decelerated for the second consecutive month, growing 9.3% compared to a 22.2% increase in May. The growth slowdown in June is partly due to much stronger comparative, with a growth of 1.7% recorded in the same month last year as the government relaxed lockdowns and allowed nonessential retailers to restart trade from June 15, 2020.
The largest driver of the slowdown in retail sales in June 2021 came from online-only retailers, as consumers continue to return to stores for shopping. Food retailers also saw their sales decline as the easing of hospitality restrictions and return to eating and drinking out led to the dilution of food spending. Nonfood sectors provided the most significant contribution to year-over-year sales growth in June 2021, aided by double-digit increases for clothing retailers and footwear specialists.
Figure 1. Total UK Retail Sales (ex. Automotive Fuel and Unadjusted): YoY % Change [caption id="attachment_130450" align="aligncenter" width="700"]
Data in this report are not seasonally adjustedSource: ONS/Coresight Research[/caption]
Weak 2020 comparatives inflating April and May 2021’s year-over-year growth represent a significant factor in June’s growth slowdown. However, two-year sales growth in June (11.1%) was higher than in April (10.4%) and almost flat compared to May (11.6%).
Figure 2. Total UK Retail Sales (ex. Automotive Fuel and Unadjusted): % Change from Two Years Prior [caption id="attachment_130451" align="aligncenter" width="700"]
Data in this report are not seasonally adjustedSource: 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 June 2021 sales to pre-pandemic June 2019 sales in this section.
Small retailers (as defined below Figure 3) saw strengthened two-year sales growth of 17.1%. Within this category of retailers, small clothing retailers proved to be an exception, as sales by these retailers slid by 41.4% from 2019 values. Large retailers, which account for the bulk of retail sales, continued their growth momentum—posting total two-year growth of 9.3% in June versus an 8.7% increase in April.
Grocery retail store sales saw sales jump 8.1% from pre-pandemic values, after a modest 3.6% increase in May.
DIY and hardware retail sales remain strong, growing 30.1% on a two-year basis in June, after a 29.2% increase in May. Furniture and lighting stores experienced significant growth deceleration, slowing from 34.8% in May to 7.2% in June.
Clothing and footwear retail sales continue to stay volatile compared to 2019 levels. Clothing retailers’ sales declined by 5.5% in June, compared to a 2.4% decrease in May. Similarly, footwear retailers saw sales decline by 12.7%, compared to a 2.0% decrease in May.
The health and beauty sector maintained its sequential growth momentum, increasing by 9.7% in June compared to a 5.9% increase in May, on a two-year basis.
Figure 3. UK Retail Sales, by Sector: YoY % Change
[wpdatatable id=1135] [wpdatatable id=1136]*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 26.1% of All Retail Sales
Total online retail sales saw significant year-over-year growth erosion, sliding into the negative territory for the first time since November 2019. Internet sales slid by 8.8% year-over-year in June, down from a 1.8% increase in May. Food retailers’ e-commerce sales saw negative growth for the second consecutive month, declining by 8.9% in June, compared to a 7.2% decrease in May.
Nonfood retailers also saw substantial decline in online sales, decreasing by 11.6% in June, compared to an 8.7% increase in May. Apparel retailers’ online sales saw year-over-year growth moderation, increasing by 5.3% in June compared to 47.0% in May.
As shown in the figure below, online sales as a percentage of overall retail sales continued its downward slide, reaching 26.1% in June—a decrease of 5.2 percentage points compared to online sales penetration in June 2020, but 7.8 percentage points higher than June 2019.
Figure 4. Online Retail Sales as % of Total Retail Sales
[caption id="attachment_130462" align="aligncenter" width="700"]
“Food” and “Nonfood” data are for store-based sectors; “All Retail” total includes nonstore retail, which is not chartedSource: 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 more transmissible Delta variant.
After more than a year under some form of restriction, England lifted almost all the remaining Covid-19 rules on July 19, 2021. This includes opening of nightclubs and lifting capacity restrictions on big events and performances.