Retail Sales Monitor
Clothing and Back to School Sales Drive August Growth
Helen Dickinson OBE, Chief Executive, BRC:
As the post-lockdown pent-up demand has mellowed, the growth in retail sales we have seen over the past few months slowed for August. Despite this, the month still saw growth above pre-pandemic levels, as rising consumer confidence and footfall levels led to a boost in in-store sales. With wedding season in full swing and many workers gradually returning to the office, formalwear was a strong performer. Additionally, the bank holiday weekend and back-to-school buzz contributed to the rise in non-food sales. While online sales have begun to slow, they were still high, demonstrating how the pandemic has shifted the digital-physical shopping balance.
With demand waning, combined with a precarious economic backdrop and retailers grappling with higher costs across the supply chain, the number of shuttered stores in the UK will continue to rise. The current broken business rates system is yet another burden on retailers, and Government must support retailers and deliver on its promise in the business rates review to reduce the overall burden of tax to sustainable levels. Without such intervention, we could see many retail businesses shut shop, thousands of jobs lost, and the heart of our communities gone.
Don Williams, Retail Partner, KPMG:
Much like the summer weather retail performance in August was mixed. Sales growth on the high street continued to slow, with footfall still below pre-pandemic levels and online sales took a retreat from the highs of last year, whilst some discretionary non-food categories continued their recovery.
Overall, the high street saw 3% growth, dented by lower food sales growth of 1.9% as consumers enjoyed a fully re-opened hospitality sector. Online sales fell back by -2.5% compared to August 2020, though online penetration rates remained significantly above pre-pandemic levels, signalling the step up in online shopping is here to stay. Clothing, footwear and accessories continued their recovery with some healthy sales increases but from a much lower base, whilst technology and furniture/appliance categories suffered against very strong comparatives in 2020.
With the retail recovery showing signs of slowing, the sector is expected to grow at a more muted rate as retailers face increasing challenges on a number of fronts. Inflation is expected to accelerate putting pressure on household spending, whilst retailers battle for share of wallet as consumers spend money on leisure, entertainment and travel. Staffing pressures remain and supply chain issues are being widely reported, with raw material shortages and challenges getting product into the UK and getting goods into customers‘ hands. This may feed into limited availability of certain products and the spectre of price rises remains.
“Retailers will be pinning their hopes on a more predictable normal with white collar workers returning to city centres in greater numbers from this month and a buoyant Christmas fuelled by some of the savings that consumers have made over the last 18 months of lockdown and restricted spending. Nonetheless, successful retailers will have to work very hard to ensure the right availability of the right product to satisfy the requirements of an ever more demanding customer.”
Food & Drink sector performance, Susan Barratt, CEO, IGD:
Food and drink sales in August were broadly flat on 2020’s performance, with some spending switching from retail back into the out-of-home sector. Despite sales being limited by the dull weather, they were supported by staycations and the late summer Bank Holiday, which helped sales show a small amount of growth.
IGD’s Shopper Confidence Index remained strong, continuing to hit one of the highest levels in the last five years. However, concern around inflation continues, with IGD’s ShopperVista revealing that 79% of shoppers expect food and grocery prices to get more expensive in the year ahead, up from 75% in July ’21. With much of the economy now open, more shoppers are changing what they spend their money on; some 73% have spent more on products and services in August, compared to 69% in June’21 and 31% are spending more on eating and drinking out, compared to 22% in June’21.