Nitheesh NH
UK Retail Sales: March 2022
In March, total UK retail sales lost momentum amidst the rising cost of living in the UK. Total retail sales grew a modest 4.9% from a year earlier, a downturn from February’s 10.2% revised year- over-year growth, according to the ONS. In March, the ONS’s implied retail inflation metric grew 7.6% from a year earlier. While surface-level sales value growth remained positive, sales volumes declined 2.5% from the previous year in March. The decline in sales volumes reflects the impact of the 30-year high inflationary context in the UK. Consumers are unable to purchase goods in the same quantities they were previously able to due to rising costs. Overall sales volumes declines were driven by a 7.9% fall in sales volumes at nonstore retailers, according to the ONS. Sales volumes remained 2.2% higher than their pre-pandemic February 2020 levels.Figure 1. Total UK Retail Sales (ex. Automotive Fuel and Unadjusted): YoY % Change [caption id="attachment_146059" align="aligncenter" width="700"]
Data in this report are not seasonally adjustedSource: ONS/Coresight Research [/caption] Retail Sales Growth by Sector In a modest month of sales growth amidst a backdrop of a 30-year high inflationary context, some sectors are proving resilient while others are seeing sales declines. Clothing specialty retailers are continuing to see strong sales growth boosted by a further return to socializing and the office. Sales at large clothing specialists grew 72.2% from a year earlier while sales growth at small clothing specialists accelerated to 159.2%. Overall, clothing specialty retailers saw sales rise by 78.6% in March. One year earlier, sales were down 11.7%. Footwear specialty retailers roughly doubled sales from a year ago. Sales grew 99.3% from the previous year (when sales were down 11.4%). Sales at department stores/mixed-goods retailers have been slowing for three consecutive months. In March, sales grew marginally by 0.9%, down from February’s 5.0% year-over-year growth. Grocery retailers are losing out amid the rising costs of food owing to recent geopolitical developments. In March, negative sales growth accelerated to 6.9%. Prices at food stores rose 6.4% from a year earlier, reflecting that the real sales loss is much greater: The ONS reported that real-terms sales at grocery retailers were down 12.5% year over year—a decline without precedent in recent decades. DIY and hardware stores also witnessed an acceleration in sales declines. This month, sales declined by 16.0%. In February, the sector witnessed sales decline by 7.9%. Internet pure plays continued to see sales declines, reflecting the overall struggling e-commerce growth in the UK. Sales at Internet pure plays declined 13.4% from the previous year, while overall ecommerce sales declines continued to accelerate. Sales at furniture and lighting stores continue to be healthy. Furniture and lighting store sales grew 44.1% from the previous year, accelerating from February’s 35.2% year-over-year growth. Sales at electronics retailers picked up in March growing 7.3% from a year earlier, up from February’s 3.9% year-over-year sales growth.
Figure 2. UK Retail Sales, by Sector: YoY % Change [wpdatatable id=1923]
*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 Decline by One-Fifth E-commerce continued to see sales declines accelerate in March. E-commerce sales declined 20.6% from a year earlier, surpassing the revised February 16.1% year-over-year sales decline, for the largest online sales decline since the ONS began tracking online sales in 2006. Overall online sales declines were propelled by a 28.0% online sales decline at predominantly nonfood stores. Within nonfood, online clothing retailers’ sales declined by 13.6% while online sales at household goods retailers declined by 38.3%. Online sales at food stores declined by 19.9%. As shown in Figure 3, below, online sales as a percentage of overall retail sales in March continued a downward trend. In March, online sales accounted for 26.1% of total retail sales, the lowest overall online penetration since February 2020, according to the ONS.Figure 3. Online Retail Sales as % of Total Retail Sales [caption id="attachment_146062" 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 May 13 and furniture stores 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 classified 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. On December 13, British health secretary Sajid David announced that approximately 200,000 people nationwide had tested positive for the Omicron variant. On December 14 Prime Minister Boris Johnson put forth a new policy of mask mandates and proof of vaccine certification to enter nightclubs and other crowded public spaces. On January 19, 2022, Prime Minister Johnson lifted the mask mandate and no longer required proof of vaccination to enter large or crowded places, signaling the worst of the Omicron variant was behind in the UK. On February 24, 2022, the legal requirement to self-isolate upon testing positive was removed in England as part of the government’s “Living with Covid” plan. Contact tracing of those testing positive and self-isolation for contacts of positive cases also ended in England. On March 18, 2022, all international travel restrictions, such as passenger locator forms and Covid-19 testing for unvaccinated travelers, were removed. On March 24, 2022, Covid-19 provisions attached to statutory sick pay were removed in England. Guidance on workplace risk assessments was also removed. On April 1, 2022, free universal Covid-19 testing was removed in England.