Period covered: January 21Published: February 09, 2021Read time: 15min

Retail Sales Monitor

New Year Sales Slump Under Lockdown

Helen Dickinson OBE, Chief Executive, BRC: 

“January saw retail sales growth decline to its lowest level since May of last year. The current lockdown has hit non-essential retailers harder than in November, with the new variant hampering consumer confidence and leading customers to hold back on spending – especially on clothing and footwear. Meanwhile, retailers have worked incredibly hard to expand their online delivery and click and collect offerings to ensure everyone can get the products they need during lockdown. This has led to record growth for online non-food sales and is a testament to the resilience and innovation of retail, which in the face of the pandemic, has rapidly adapted and invested in online platforms and delivery logistics.

“Retail firms are supporting the Government’s efforts to combat the virus and the industry will continue to play its part in the fight by stepping up safety measures to keep their teams and customers safe. However, three periods of prolonged closure for some and the ongoing uncertainty around reopening puts many retailers in a precarious position. If Government wants to avoid further administrations of otherwise viable businesses and thousands of jobs losses, it must provide those firms which have been hardest hit with the necessary financial support, including targeted business rates relief beyond March.”

Paul Martin, UK head of retail, KPMG: 

“For the first time since last spring, we saw total monthly sales decline and even the on-going demand for groceries and home-related categories was not enough to halt the fall. Although online channels continued to experience historic growth with more than 60% of all non-food sales transacted online, the lockdown meant that the traditional January sales period did not really materialise for the rest of the retail sector, with just a handful of categories recording any growth.

“Computing was the hot category and saw triple figure growth online as schools closed and parents rushed to purchase laptops and printers.  Meanwhile, clothing retailers continued to struggle with physical sales down across all categories. 

“With much of the UK in lockdown for the foreseeable weeks, conditions for retailers will continue to be incredibly challenging. On the one side dealing with a continued increase in online demand versus subdued demand on the high street - and overall in many cases, thinner margins and rising logistics costs and complexities post Brexit. Consumers are well versed in lockdown living now, and looking ahead, fortunes will be mixed but pent up savings and a successful vaccine roll out should help to support recovery in the retail sector later in the year.”

Food & Drink sector performance, Susan Barratt, CEO, IGD: 

“Food and drink sales followed a familiar January dynamic, dropping back following the festive sales generated in December. The latest national lockdown triggered a small spike in sales at the start of the month, but this was much more modest than the surge experienced in the first lockdown in March. Many categories continue to benefit from the closure of the out-of-home sector. Alcohol sales have fared particularly well, with ‘dry January’ having little impact on consumers’ spending.

“IGD’s Shopper Confidence Index improved in January to the highest level since February 2020, boosted by the swift rollout of the COVID-19 vaccination programme. Confidence has increased most among those aged 55 and over, a priority group to receive the vaccine. While boosted in the short-term, confidence is likely to remain fragile as shoppers feel the impact of the economic downturn. Any supply chain disruption due to the new trade deal with the EU could also have an impact on shoppers.”