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Shoppers continued to spend more online in August – but overall retail spending still lower than pre-Covid as in-store sales decline

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Shoppers continued to spend more online in August – but overall retail spending still lower than pre-Covid as in-store sales decline

Shoppers turned online to spend once more in August, driving the strongest UK retail sales growth for more than two years, the latest figures from the British Retail Consortium suggest. Despite this, says the BRC, retail sales remain lower than they were before the pandemic, with store-based categories including clothing, footwear and beauty hit particularly hard.

 

Some 39.3% of UK retail sales took place over the internet last month, according to the BRC-KPMG Retail Sales Monitor for August. That’s up from 29% a year earlier and illustrates the fast growth of online sales in recent months, both during and since the Covid-19 pandemic and lockdown. Ecommerce increased its share of the retail market as online sales of non-food products grew by 42.4% in August.

 

Overall, retail sales grew by 3.9% in August in total compared to the same time last year – when they were down by 0.4% on the previous year. Like-for-like sales, which excluded temporarily closed shops, rose by 4.7%, having fallen by 0.8% in the previous year.

 

That’s the strongest retail performance since May 2018, according to the monitor. Despite the online growth, non-food sales fell in store by 17.8% in total (-8.5% LFL) in the three months to the end of August and, says Helen Dickinson, chief executive of the British Retail Consortium (BRC), retail sales are still lower than they were at the start of the pandemic.

 

“Remote working has continued to help sales in home goods, such as food, computing, furniture and TVs,” she said. “Lockdown also appears to have permanently changed some consumers’ shopping habits, with online sales continuing to boom despite shop reopening in June. Meanwhile, city centre retailers continue to be devastated by low footfall and poor sales, as office workers stayed away for yet another month.

 

“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. Government will need to act fast or September will see more shops close and more job losses realised.”

 

Food sales grew over the same period by 5.9% in total and by 6.3% LFL in the three months to August. Non-food sales over the same period grew by 1.4% in total, and by 7.7% LFL.

 

Paul Martin, UK head of retail at KPMG, said: The retail sector continued to show promising signs of recovery in August, with like-for-like retail sales up 4.7% compared to last year. Whilst welcome news, 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. Fashion sales did start to rebound somewhat – at least online – although this was mainly driven by children’s back-to-school purchases. Likewise, the focus on home-related products, including furniture and computing equipment, continued – no doubt aided by many consumers remaining mostly at home.

 

“The online channel remains prominent, with penetration rates still high at 39.3% for non-food. Indeed, the vast majority of online categories realised significant growth in August. 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. With this in mind, retailers need to focus on the cost of doing business, as online is generally more expensive to operate.”“

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