DIpil Das
UK Retail Sales: March 2021
In March, total UK retail sales jumped 9.3% year over year, partly due to the annualization of crisis spending patterns. This is in line with our expectation of positive year-over-year growth from March as we lap the start of lockdowns one year earlier. England and the devolved nations of Northern Ireland, Scotland and Wales having eased a raft of virus-related restrictions beginning April, with non-essential stores reopening in England and Wales from April 12. Coupled with the lockdown-driven deep decline in April in retail, we expect to see a very strong year-over-year jump in total sales in April 2021.Figure 1. Total UK Retail Sales (ex. Automotive Fuel and Unadjusted): YoY % Change [caption id="attachment_126360" align="aligncenter" width="725"]
Data in this report are not seasonally adjusted Source: ONS/Coresight Research [/caption] The strong year-over-year growth in March is partly due to weak comparatives, with a decline of 2.8% recorded in the same month last year as the health crisis hit the UK. However, comparing sales to March 2019, this year’s growth is still strong—particularly given that the UK was still under lockdown restrictions. Retail sales saw a two-year increase of 6.2%—up from the 1.0% two-year increase in February.
Figure 2. Total UK Retail Sales (ex. Automotive Fuel and Unadjusted): % Change from 2019 [caption id="attachment_126387" align="aligncenter" width="725"]
Data in this report are not seasonally adjusted Source: ONS/Coresight Research [/caption] Retail Sales Growth by Sector The onset of the pandemic in the UK in March 2020 and the subsequent lockdown imposed by the government on March 23 caused certain sectors to see dramatic sales declines, skewing year-over-year growth numbers. To account for this impact, we largely compare March 2021 to sales from pre-pandemic March 2019 in this section. Small retailers (as defined below Figure 3) strengthened two-year sales growth to 10.4%. Within this category of retailers, small clothing retailers proved to be an exception, as sales by these retailers slid by 67.4% from 2019 values. Large retailers, which account for the bulk of retail sales, also gained momentum—posting total two-year growth of 5.0% in March versus a 0.3% two-year decline in February. Grocery retail store sales grew 14.5% in March from 2019 levels—substantially higher than the robust 9.7% growth seen in January and February. These data reflect the closure of food-service businesses during lockdowns and indicate that consumers focused their spending on essentials. DIY and hardware retailers saw strong growth in March, compared to both 2020 and 2019, with sales up 45.9% and 55.5%, respectively. Clothing specialists continue to struggle, with a year-over-year sales decline of 12.2% in March 2021. Compared to 2019, clothing specialists saw sales fall by 44.2%, an improvement from the two-year growth decrease of 53.4% in February 2021. Two-year growth at department stores, which have been heavily challenged amid the pandemic, turned positive for the first time in 2021, with 3.2% growth in March compared to 2019. This sector comprises full-range department stores such as John Lewis and variety-stores such as Argos and B&M Bargains. Health and beauty sales were still down in March compared to two years prior, though the sector saw sequential growth improvement from the start of the year.
Figure 3. UK Retail Sales, by Sector: YoY % Change
*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 32.8% of All Retail Sales Total online retail sales rose by 62.2% year over year in March, down from a 79.4% increase in February. Internet sales by food retailers saw particularly strong growth in March, increasing by 104.7%—the third consecutive month that online sales growth in this category have topped 100% year over year. Nonfood retailers saw softening of online sales growth, which rose 80.4% year over year, compared to a 100.1% increase in February. The household goods sector did particularly well, rising 98.8% in March. Moreover, online sales by apparel retailers’ also maintained growth momentum, with an increase of 78.2% in March, compared to 37.1% growth in February. Online sales as a percentage of overall retail sales decreased slightly in March to 32.8%, versus 34.6% in February—equating to a year-over-year increase of 10.7 percentage points in March 2021 and almost 14 percentage points higher than March 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_126362" 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 gyms, pubs and restaurants, theme parks, and zoos allowed to reopen for outdoor service and shops and hairdressers again permitted to serve customers. The next significant lockdown roadmap date is May 17, when groups of up to six people from different households will be allowed to socialize indoor, pubs and restaurants will be able serve indoors and foreign holidays will be permitted if the lift on restrictions goes ahead. On April 20, Nicola Sturgeon announced that Scotland will move down to Covid protection Level 3 from Level 4 on April 26, meaning hospitality venues including beauty salons, cafés, and pubs and restaurants can reopen.