Nitheesh NH
In November, total UK retail sales jumped 7.6% year over year, despite a four-week nationwide lockdown imposed in England from November 5 to December 2. Growth was supported by substantial year-over-year increases in DIY and hardware stores, electrical goods retailers and grocery stores.
Online retail sales as a percentage of overall retail sales accelerated strongly, accounting for 36.0% of all retail sales in November, up from 28.2% in October (charted in Figure 3). This implies that many discretionary retailers, which had to temporarily shutter their stores, were able to partially retain their sales through online retail. Like in the US, many UK retailers nudged their customers to start shopping earlier by extending their Black Friday deals online through November, which provided an added boost to online sales.
Figure 1. Total UK Retail Sales (ex Automotive Fuel and Unadjusted): YoY % Change
[caption id="attachment_120981" align="aligncenter" width="700"]
Data in this report are not seasonally adjusted
Source: ONS/Coresight Research[/caption] Retail Sales Growth by Sector The ONS reported double-digit growth for big-ticket sectors, including electrical goods retailers and DIY stores. Small retailers strengthened sales growth to 21.5% (small clothing retailers were one exception—sales fell by double digits in this sector, as shown in Figure 2). Growth at large retailers, which account for the bulk of retail sales, decelerated slightly, posting an increase of 3.6% year over year in November versus 5% in October. DIY and hardware sector maintained its winning streak, surging 43% year over year in November, compared to 33.2% in October. Hardware retail and garden centers were considered “essential” and stayed open during the lockdown. The grocery sector grew significantly in November as consumers stayed home and food-service businesses such as bars and restaurants had to shut as part of the lockdown restrictions. Sales at grocery retailers jumped 8.6% year over year in November versus 4.6% in October. Health and beauty saw substantial growth erosion, increasing by a modest 3.7% year over year in November, compared to 14.7% in October. Health-care stores such as pharmacies, which were allowed to stay open during the lockdown, likely contributed to growth, and sales by non-health-care stores will have been captured predominantly by e-commerce. The clothing sector, which saw a sequential growth improvement in last few months, took the biggest hit again, with sales plummeting 31.5% year over year, while footwear store sales nosedived 33.5%. This was exemplified by the announcement from apparel retailer Primark that it had lost an estimated £430 million ($580 million) in the second lockdown. Department stores witnessed an improvement in sales, with year-over-year growth of 3.2%. Some of the mixed-goods stores in this sector were allowed to stay open as they sell a significant amount of essential goods, including food. This sector’s performance is not representative of the major department store chains, which were closed during the lockdown. Sales at online-only retailers sustained growth momentum, expanding 49.5% year over year in November, compared to 44.4% in October. Figure 2. UK Retail Sales, by Sector: YoY % Change [wpdatatable id=647]
“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 The UK was put into lockdown on March 23, initially for three weeks in an attempt to limit the spread of coronavirus, shuttering down non-essential retail stores. On April 16, the government announced to extend the lockdown by another three weeks. On May 11, Prime Minister Boris Johnson announced that the government would begin easing the 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 followed by announcing that all nonessential retailers in England and Northern Ireland, including department stores and small independent shops, will be allowed to reopen from June 15, given that stores implement measures to meet the necessary social distancing and hygiene standards. On June 23, Johnson announced that restaurants, pubs, museums, cinemas and hotels can 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. On October 31, Johnson announced a second lockdown for England for the period November 5 to December 2. All nonessential retail must 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 can remain open. Hospitality venues like restaurants, bars and pubs must close but can still provide takeaway and delivery services. When the lockdown ended on December 2, England returned to its three-tier system of restrictions. On December 14, Johnson announced that certain areas—including London and much of the southwest—would be reclassified as the highest tier (Tier 3, in which restrictions are toughest) effective December 16. In Tier 3, accommodation, hospitality venues and food-service businesses—including bars, pubs, cafes and restaurants—must close except for takeaway and delivery services, but there are no direct rule changes for retail, which can remain open. The three-tier system is set to be updated on a fortnightly basis and is being reviewed based on coronavirus case numbers, local rates of infection and hospital admissions.
Data in this report are not seasonally adjustedSource: ONS/Coresight Research[/caption] Retail Sales Growth by Sector The ONS reported double-digit growth for big-ticket sectors, including electrical goods retailers and DIY stores. Small retailers strengthened sales growth to 21.5% (small clothing retailers were one exception—sales fell by double digits in this sector, as shown in Figure 2). Growth at large retailers, which account for the bulk of retail sales, decelerated slightly, posting an increase of 3.6% year over year in November versus 5% in October. DIY and hardware sector maintained its winning streak, surging 43% year over year in November, compared to 33.2% in October. Hardware retail and garden centers were considered “essential” and stayed open during the lockdown. The grocery sector grew significantly in November as consumers stayed home and food-service businesses such as bars and restaurants had to shut as part of the lockdown restrictions. Sales at grocery retailers jumped 8.6% year over year in November versus 4.6% in October. Health and beauty saw substantial growth erosion, increasing by a modest 3.7% year over year in November, compared to 14.7% in October. Health-care stores such as pharmacies, which were allowed to stay open during the lockdown, likely contributed to growth, and sales by non-health-care stores will have been captured predominantly by e-commerce. The clothing sector, which saw a sequential growth improvement in last few months, took the biggest hit again, with sales plummeting 31.5% year over year, while footwear store sales nosedived 33.5%. This was exemplified by the announcement from apparel retailer Primark that it had lost an estimated £430 million ($580 million) in the second lockdown. Department stores witnessed an improvement in sales, with year-over-year growth of 3.2%. Some of the mixed-goods stores in this sector were allowed to stay open as they sell a significant amount of essential goods, including food. This sector’s performance is not representative of the major department store chains, which were closed during the lockdown. Sales at online-only retailers sustained growth momentum, expanding 49.5% year over year in November, compared to 44.4% in October. Figure 2. UK Retail Sales, by Sector: YoY % Change [wpdatatable id=647]
*A small retailer is defined as one with fewer than 100 employees or with revenues of £60 million (around $81 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 36% of All Retail Sales Total online retail sales climbed 79.6% year over year in November, compared to 60.3% in October. At food retailers, Internet sales were up 107.8% in November, versus 99.3% in November. In November, Internet sales surged 113.7% at store-based nonfood retailers compared to the year-ago period, versus 64.5% in October, supported by strong sales at non-specialized stores, which were up 151.6%. Online sales jumped 51.6% at nonstore retailers. Online retail sales as a percentage of overall retail sales maintained growth momentum in November: Online sales accounted for 36.0% of all retail sales, indicating that e-commerce was able to fill more of the gap than in the first lockdown in March. We chart the trend for all retail and the store-based food and nonfood sectors in Figure 3. Figure 3. Online Retail Sales as % of Total Retail Sales [caption id="attachment_120982" 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 The UK was put into lockdown on March 23, initially for three weeks in an attempt to limit the spread of coronavirus, shuttering down non-essential retail stores. On April 16, the government announced to extend the lockdown by another three weeks. On May 11, Prime Minister Boris Johnson announced that the government would begin easing the 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 followed by announcing that all nonessential retailers in England and Northern Ireland, including department stores and small independent shops, will be allowed to reopen from June 15, given that stores implement measures to meet the necessary social distancing and hygiene standards. On June 23, Johnson announced that restaurants, pubs, museums, cinemas and hotels can 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. On October 31, Johnson announced a second lockdown for England for the period November 5 to December 2. All nonessential retail must 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 can remain open. Hospitality venues like restaurants, bars and pubs must close but can still provide takeaway and delivery services. When the lockdown ended on December 2, England returned to its three-tier system of restrictions. On December 14, Johnson announced that certain areas—including London and much of the southwest—would be reclassified as the highest tier (Tier 3, in which restrictions are toughest) effective December 16. In Tier 3, accommodation, hospitality venues and food-service businesses—including bars, pubs, cafes and restaurants—must close except for takeaway and delivery services, but there are no direct rule changes for retail, which can remain open. The three-tier system is set to be updated on a fortnightly basis and is being reviewed based on coronavirus case numbers, local rates of infection and hospital admissions.