Retail sales ‘not out of the woods yet’

On a total basis, retail sales decreased by 5.9 per cent in May, against a decrease of 1.9 per cent in May 2019.

This was the second worst decline recorded since the British Retail Consortium (BRC) and KPMG monitor began in January 1995 – but also an improvement over April.

On a like-for-like basis, UK retail sales increased 7.9 per cent from the same month last year, when they had decreased 2.2 per cent from the preceding year. In May, like-for-likes were measured excluding temporarily closed stores, but including online sales; which have primarily driven the positive figure.

Over the three months to May, in-store sales of non-food items declined 50.3 per cent on a total and 21.9 per cent on a like-for-like basis. This is worse than the 12-month total average decline of 14.8 per cent. For May, the like-for-like figure excluding temporarily closed stores remained in double digit decline.

Over the three months to May, food sales increased 8.7 per cent on a like-for-like basis and 5.6 per cent on a total basis – higher than the 12-month total average growth of 2.1 per cent.

During the same period, non-food retail sales decreased by 2.1 per cent on a like-for-like basis and 21.8 per cent on a total basis – below the 12-month total average decline of 6.4 per cent.

Online non-food sales increased by 60.2 per cent in May, against a growth of 4.4 per cent in May 2019. The non-food online penetration rate increased from 31.4 per cent in May 2019 to 61.9 per cent this May.

BRC chief executive Helen Dickinson stated that while the month showed record growth in online sales, many retailers will be anxious to see whether demand returns to high streets when non-essential shops reopen from 15 June.

“Weak consumer confidence and social distancing rules are likely to hold back sales,” she commented, adding: “There are concerns that if government support is withdrawn too quickly, shops and businesses will not survive.”

Paul Martin, UK head of retail at KPMG, pointed out that the disparity between different types of retailers and categories continues, with clear divides between essential and online versus non-essential and physical.

“Sales of computing equipment, toys and other household goods remained strong – especially online - with home-working and entertainment firmly at the forefront of consumers’ minds - food and drink also performed well; no doubt encouraged by warmer weather and May’s bank holidays.

“By contrast, many non-essential categories - especially fashion - continued to attract limited demand which will increase the pressure on them in the coming months."

Martin added that COVID-19 has acted as an accelerant in the shift towards having less of a physical presence, not least due to the obvious need to radically reduce costs for survival.

“We’re also witnessing historically high levels of sales transacted online - currently over 60 per cent - and while this will ease as more stores open, consumers have formed new habits that will see the online channel continue to be more prominent going forward.”

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