Retail sales drop by 8.2% in Jan

Retail sales declined by 8.2 per cent in January compared to the previous month, with tougher coronavirus restrictions impacting volumes.

According to the latest Office for National Statistics (ONS) retail figures, sales volumes dropped 5.5 per cent lower than before the pandemic in February 2020.

The statistics authority said the figures indicated that the impact of restrictions on the retail sector was not as significant as that seen in April 2020, during the first full month of restrictions when sales declined by 22.2 per cent compared to levels prior to the pandemic.

Online stores saw spend surge by 35.2 per cent last month, the highest growth on record, compared to 29.6 per cent in December 2020 and 19.5 per cent reported in January 2020.

All store types reported an increase in their proportion of online spending in January 2021 when compared with December 2020; with food stores reaching an historic high of 12.2 per cent of sales conducted online.

The research demonstrates a monthly decline in volume sales in January for all sectors, except for non-store retailers and food stores, who reported growth of 3.7 per cent and 1.4 per cent respectively compared to December.

ONS said that in the three months to January 2021, retail sales volume fell by 4.9 per cent when compared with the previous three months, with strong declines in both clothing stores and automotive fuel.

“England’s third lockdown cut retail spending this month, as high street footfall remained down by over three quarters,” said Helen Dickinson, chief executive, British Retail Consortium (BRC.) “Large non-food stores saw their thirteenth month of decline, increasing the risk of yet more retail stores being permanently shuttered.

She added: “January’s lockdown has hit non-essential retailers harder than in November, with the new variant hampering consumer confidence and leading customers to limit spending, especially on fashion and textiles. Meanwhile, retailers have invested heavily in their online offering and click and collect services to ensure shoppers will still be able to access vital goods.”

She said that reviving the economy requires unlocking “pent up demand” that sits "untapped" in savings accounts.

“The chancellor should therefore focus on unleashing, not stifling, demand, thus supporting the millions of jobs the retail industry supports in communities across the UK,” she continued. “Sadly, retail has been overpaying tax for too long. The industry is 5% of the economy, yet pays 10% of business taxes – this is neither fair nor sustainable.

She concluded: “If Government wants to avoid further administrations of otherwise viable businesses, it must provide those firms which have been hardest hit by the pandemic with the necessary support. This means extending the moratorium on aggressive debt enforcement, removing EU state aid caps on support grants, and providing targeted business rates support to those companies worst affected by the pandemic.”

Lynda Petherick, head of retail, Accenture UKI, said “It’s been an exceptionally challenging start to the year for retailers, with January falling victim to yet another drop in total sales volume. With non-essential retail stripped of all in-store footfall as the UK entered yet another national lockdown, retailers were forced to rely on ecommerce to capitalise on the typical January sales season, with online sales soaring to eat up a large proportion of total retail spend.

She added: “Retailers will be holding their breath for the government’s ‘roadmap’ out of lockdown. There is light at the end of the tunnel and businesses can now be thinking about how their long-term strategies can best exploit pent up consumer demand, while balancing exciting and safe instore experiences. However, these plans must remain on ice for now, with the immediate focus on continuing to capitalise on the recent record sales of non-food items online, by ensuring ecommerce offerings are as seamless and engaging as possible.”

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