Stores ‘still struggling’ despite August sales rise

In August, UK retail sales increased 4.7 per cent year-on-year, when they had decreased 0.8 per cent from the preceding year.

The latest British Retail Consortium (BRC) and KPMG sales tracker showed that on a total basis, sales increased by 3.9 per cent in August, against a decline of 0.4 per cent in August 2019. This is the best growth since May 2018, excluding Easter distortions.

Over the three months to August, in-store sales of non-food items declined 17.8 per cent on a total and 8.5 per cent on a like-for-like basis. For August, the like-for-like - excluding temporarily closed stores - remained in decline.

Over the three months to August, food sales increased 6.3 per cent on a like-for-like basis and 5.9 per cent on a total basis, while non-food sales increased by 7.7 per cent on a like-for-like basis and 1.4 per cent on a total basis.

Online non-food sales increased by 42.4 per cent in August, against growth of 1.6 per cent in August 2019. The non-food online penetration rate increased from 29 per cent in August 2019 to 39.3 per cent this August.

BRC chief executive Helen Dickinson said that despite another month of growth in August, retail sales remain down overall since the start of the pandemic.

“Remote working has continued to help sales in home goods, such as food, computing, furniture and TVs,” she stated, noting that lockdown appears to have permanently changed some consumers’ shopping habits, with online sales continuing to boom despite shops reopening in June.

“Many retailers are continuing to struggle, particularly those in clothing, footwear and beauty, that are reliant on high footfall locations.

“With rents accumulating, and the September quarter payment date fast approaching, many retailers are hanging on by a thread – unless businesses and government can successfully persuade office workers back into city and town centres, some high street retailers will be unable to afford their fixed costs,” Dickinson added.

KPMG’s UK head of retail Paul Martin agreed that the coming months are far from problem free, with economic uncertainties - including the unwinding of the furlough scheme - likely to leave many consumers thinking carefully about their spending priorities.

“We continue to experience mixed fortunes and not all retailers are where they should be at this point in the year,” he continued. “Fashion sales did start to rebound somewhat - at least online - although this was mainly driven by children’s back-to-school purchases.”

Martin added: “Clearly retailers have some serious thinking to do around what the future of the industry is going to be exactly – while the overall online penetration rate has declined in recent months, the significant acceleration of the channel is here to stay.”

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