UK retail sales fell at their fastest rate on record in March – when most stores closed their shutters to protect against the Covid-19 pandemic. At the same time, ecommerce took its largest ever share of retail spending – at 22.3% of all sales.
Non-essential stores were ordered to shut by the government on March 23 – and today’s official figures covering the whole of the month show overall retail sales for the month fell by 5.1%. That’s the largest fall since the monthly Office for National Statistics (ONS) Retail Sales Monitor began.
Non-food sales were hit hard, falling by 20% in value compared to the previous month, with clothing particularly badly affected. Food sales grew by 10.3% in value compared to the previous month, with online food sales up by almost 20%.
Overall, online sales grew strongly. They were up by 12.5% compared to a year earlier, and by 8.3% compared to the previous month, and reached a record high of 22.3% of all retailing during the month, as shoppers moved more of their purchases online.
Since most shops were open as normal until March 23, today’s figures only show the beginning of an effect that is likely to be massively more pronounced when figures for April are released next month. Today’s figures cover the period from March 1 to April 4, meaning that two weeks of the five-week trading period were affected by the social distancing measures and closure of non-essential shops.
Retail sales figures across channels
The ONS figures suggest that shoppers spent 6% less compared to last March to buy 5.8% fewer goods. They spent 5.7% less than in February and bought 5.1% fewer goods. A large part of that is down to lower spending on petrol and diesel. When automotive fuel is excluded, shoppers spent 3.9% less to buy 4.1% fewer goods year-on-year (YOY) and 3.8% less to buy 3.7% fewer goods month-on-month (MOM). In the three months to March 2020, sales fell by 1.4% in value and by 1.6% in volume compared to the previous three months.
Department stores enjoyed the strongest online growth, with ecommerce sales up by 33.7% compared to a year earlier, and by 47.4% compared to the previous month. In March 2019, online sales had grown by 0.1%. This year, online growth helped to compensate for store closures, and overall sales in the sector were up by 2.2% on last year, and 2.8% on last month. The sector was a rare beneficiary in the non-food sector, perhaps because a greater proportion of business in this category has already moved online. However, clothing sales were as hard hit in department stores as elsewhere, with sales down by 34.3% month on month.Department store online spending was directed towards categories including food, household goods and other non-food categories that also increased elsewhere.
Online food sales grew by 19.7% in March, compared to the previous year, and by 17.9% on the previous month, as a record 5.7% of food sales took place online. Sales across all channels grew by 10.3% compared to the previous month. Within that, supermarket sales grew by 10.2% in value, specialist food shop sales were up by 5%, and alcohol sales grew 32.6% in value. Online-only, or pureplay, food retailers saw their sales double (+101%). In March 2019, food sales by pureplay retailers had grown by 2.6%. Comments from food retailers suggested that stockpiling was a big factor in increased sales, particularly at supermarkets. But store closures affected smaller retailers, although some did offer delivery-only sales.
Clothing, textiles and footwear
Online clothing sales were down by 4.4% on the previous year, and 16.1% on the previous month, while sales across all channels fell by 28.4% compared to the previous year and by 35.5% compared to the previous month. Online-only clothing retailers saw their sales decline by 0.8%. “Consumers appeared to be focusing on essential purchases to stockpile, with clothing suffering as a result,” said the ONS report.
Online sales of household goods grew by 51.8% on last year, and by 36.9% on last month. Overall sales fell by 8.9% in value, compared to the previous month.
Other non-food stores
In this category online sales grew by 6.4% on last year, and by 2.4% on last month. But store closures hit hard in this category, and overall sales across all channels fell by 26.5% compared to the previous month.
Paul Martin, UK head of retail at business advisor KPMG, said: “It’s important to remember that March retail sales figures only capture a small proportion of the lock down – coming in place on March 23rd - but what is clear is that sales of non-essentials had evaporated well before the restrictions came into place, as anxiety about the virus started to build.
“Grocers and online retailers may appear beneficiaries with our high streets currently void of all footfall, but the surges here aren’t likely to be enough to make up for the lost ground across the sector more broadly. Added to that, a surge in sales hasn’t necessarily meant a rise in profits, with added costs associated with meeting demand in this climate. If considering the non-essential sales missed due to lock-down, it’s likely these will be lost forever and in many cases retailers will be frantically writing off stock. Only those deemed ‘essential’ currently, or those with robust online operations, are able to adapt to this current climate. Those that can’t, are naturally fixated on when the restrictions will lift.
“If confidence deteriorates further, it’s likely retail spend will be far from anyone’s mind when things do return to the ‘new normal’. There is little question that the retail landscape has changed permanently, but the key question will be: which retailers will still be fit for purpose in the next chapter?”
Ed Whitehead, managing director EMEA at ecommerce fraud prevention specialist Signifyd, said: “Technology is playing a key role in giving retailers a fighting chance of survival when faced with temporary store closures, supply chain bottlenecks and workforce disruptions. At a fundamental level ecommerce technology is allowing retailers to maintain or pivot operations, as we have seen with a few high street retailers including Next and Arcadia who have effectively become pure play online retailers whilst their stores remain closed and online becomes their sole sales channel. The current situation has also accelerated the adoption of certain technologies that reduce the need for human interaction, whether that is automated warehousing and stock picking, click and collect, including a surge in the use of drop boxes where stores are closed or the postal services have been disrupted.”
Ryan Broomfield, partner and retail specialist at RSM said the figures reflected the start of a significant downturn in UK consumer spend.
He said: “Online sales reached a record high of 22.3% of sales in the sector in March 2020 with people staying at home even before lockdown. We should expect a further lift in April sales as consumers settle into the ‘new-normal’, but with some online-only retailers ceasing operations during lockdown, it’s clear that very few businesses will emerge unscathed. Any business with loose ends weighing on performance will get found out. The soundness of underlying business structures will be critical to survival.”
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