DIpil Das
UK Retail Sales: May 2021
In May, total UK retail sales growth slowed to 22.3% year over year, from a high of 35.8% in April. The dip in year-over-year growth was expected this month: April sales growth was much stronger due to weak comparatives. The largest driver of the slowdown in retail sales in May 2021 came from food retailers as the easing of hospitality restrictions and return to eating and drinking out impacted sales. Nonfood sectors provided the most significant contribution to year-over-year sales growth in May 2021, aided by triple-digit increases for clothing retailers and footwear specialists, as well as big-ticket sectors, such as floor covering specialists and furniture and lighting stores. On June 14, England delayed the final stage of easing lockdown restrictions by one month (until July 19) due to the spread of the Covid-19 Delta variant.Figure 1. Total UK Retail Sales (ex. Automotive Fuel and Unadjusted): YoY % Change [caption id="attachment_128806" align="aligncenter" width="725"]
Data in this report are not seasonally adjusted Source: ONS/Coresight Research [/caption] Weak 2020 comparatives inflating April 2021’s year-over-year growth represent a significant factor in May’s growth slowdown. Two-year sales growth in May was still higher than April: Sales grew 11.7% in May, up from April’s 10.4% two-year increase.
Figure 2. Total UK Retail Sales (ex. Automotive Fuel and Unadjusted): % Change from Two Years Prior [caption id="attachment_128807" align="aligncenter" width="725"]
Data in this report are not seasonally adjusted Source: ONS/Coresight Research [/caption] Retail Sales Growth by Sector The lockdown measures imposed in April 2020 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 May 2021 sales to pre-pandemic May 2019 sales in this section. Small retailers (as defined below Figure 3) saw two-year sales growth of 21.1%. Within this category, small clothing retailers were hardest hit, as their sales slid by 41.6% from 2019 values. Large retailers, which account for the bulk of retail sales, posted total two-year growth of 8.8% in May versus a 7.0% increase in April. Grocery retail store sales saw a modest 3.7% increase from pre-pandemic values—slowing from their 4.5% growth in April and 15% increase in March. Moreover, we expect growth to slow further in June, as food-service businesses were allowed to serve indoors at reduced capacity from May 17. DIY and hardware retailers saw sales growth of 29.1% from 2019 levels—though strong, it was weaker than April’s 35.8% rise. Furniture and lighting stores’ two-year sales growth jumped 34.9% in May compared to 9.6% growth in April, partly due to increased spending on outdoor living products such as garden furniture in preparation for the summer and the relaxation of social gathering rules. Clothing retailers saw sales decline by 2.4% from 2019 but are witnessing strong sequential improvement. This signals the continued recovery of the sector, which was severely affected by physical store closures. Large apparel retailers outperformed smaller retailers, witnessing positive two-year growth for the first time this year. Health and beauty sales returned to growth, increasing by 4.4% in May compared to a decline of 0.1% in April on a two-year basis.
Figure 3. UK Retail Sales, by Sector: YoY % Change [wpdatatable id=1044 table_view=regular] [wpdatatable id=1045 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 27.3% of All Retail Sales Total online retail sales rose by 1.8% year-over-year in May, down from a 31.6% increase in April. Internet sales by food retailers particularly saw growth turn negative in May, sliding by 6.8% versus an 8.4% increase in April, partly due to annualization of crisis patterns. Nonfood retailers also saw softening of online sales growth, which rose 8.4% year-over-year in May, compared to a 36.7% increase in April. Online sales of apparel retailers also saw year-over-year growth fall, with an increase of only 47.1% in May, compared to 84.1% in April. Online sales as a percentage of overall retail sales continued to slide downward, reaching 27.3% in May—a decrease of 2.1 percentage points compared to online sales penetration in May 2020, but still 8.9 percentage points higher than May 2019.
Figure 4. Online Retail Sales as % of Total Retail Sales [caption id="attachment_128830" 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 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 permitted to serve indoors and venues such as museums, cinemas and theatres allowed to reopen. On June 14, England delayed the final stage of easing lockdown restrictions by a month, until July 19, due to the spread of the more transmissible Delta variant. The final steps of easing restrictions include the re-opening of nightclubs and lifting restrictions on big events and performances. The government claimed it firmly believes this will be the last delay and that there will be no reason for it to last more than four weeks.