Retail sales fell in May to the second worst decline since BRC records began, according to new figures, despite fast growth in online sales. Total retail sales were down by 5.9%, while online sales grew by 60.2%.
However, the BRC figures represent an improvement on the worst decline ever, seen a month earlier, in April, when all non-essential shops were closed during the coronavirus lockdown.
Helen Dickinson, chief executive of the British Retail Consortium (BRC), said food, clothing and beauty sales had all improved in a month of struggle for retailers. She added: “Continuing the lockdown trend, office supplies, fitness equipment and bicycles all performed well, thanks to strong online sales and DIY was boosted by the opening of garden centres. However, for those shops whose doors remain shuttered it was once again a tough month and even those who stayed open suffered reduced footfall and huge costs implementing social distancing measures.
“While the month showed record growth in online sales, many retailers will be anxious to see whether demand returns to our high streets when non-essential shops reopen from June 15. Weak consumer confidence and social distancing rules are likely to hold back sales. Furthermore, there are concerns that if Government support is withdrawn too quickly, shops and businesses will not survive. Until the situation improves, retailers urgently need support on rents and negotiations with their landlords as high fees could force some physical retailers to shut for good.”
Meanwhile, Barclaycard figures suggested that consumer spending fell by 26.7% year-on-year in May. Spending on essential items was up by 0.9% and spending on non-essentials was down by 36.9% – an improvement, however, from a drop of 47.7% in April.
Online sales
All sales growth during May was driven by online, said the BRC. Measured on a like-for-like basis that excluded temporarily closed shops but included online sales, UK retail sales rose by 7.9%. Last May the same calculation saw sales fall by 2.2%, compared to the previous year.
Almost two-thirds of all non-food retail sales (61.9%) took place online last month, according to the BRC. That’s up from 31.4% a year earlier. Online non-food sales grew during the month by 60.2%, up from 4.4% in May 2019 and well ahead of the average 12-month growth of 12.9%.
Paul Martin, UK head of retail at KPMG, said May had been a testing month. “The decline is less drastic when compared to April’s fall of 19.1%, however we are comparing performance to the record low of May 2019,” he said. “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.
“As restrictions ease, retailers have much to consider during the pandemic’s recovery-phase. Stores may soon have the greenlight to re-open but it will be a gradual affair with safety front of mind, and some doors may not reopen at all. 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% – 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.”
Barclaycard said online spending at specialist websites, including sports and outdoor sites, was 95.3% up on a year earlier.
In-store sales
In-store sales of non-food products were down by 50.3% in total, and down by 21.9% like-for-like (LFL). In the year to May the 12-month average fall came in at 14.8%. When temporarily closed shops were excluded the decline still remained in double digits. Food sales, meanwhile, grew by 8.7% LFL and 5.6% in total, well ahead of the 12-month average of 2.1% growth.
Barclaycard figures suggested that consumer spending fell by 26.7% year-on-year in May. Spending on essential items was up by 0.9%, with supermarket spending 24.5% ahead. That rose still further to 27% in the week before the VE Day commemorations. Greengrocers and independent convenience stores benefitted from local loyalties, with sales up by 42.5% in this category. They also showed spending on non-essentials down by 36.9% on last year – with sales at department(-44.5%) and clothing (-42.4%) stores down more sharply still. That represents a slight recovery from April, when non-essential spending was down by 47.7%.
Shopper confidence
Susan Barratt, chief executive of grocery analyst IGD, said grocery retailers had enjoyed the sunniest month on record – one with two bank holidays – in which shoppers had turned to barbecues and picnics. She added: “The latest reading of the IGD Shopper Confidence Index indicates that shopper confidence remains historically low, but there are significant shifts by region, reflecting how coronavirus is impacting different parts of the country. Tracking how the pandemic affects different shopper groups will be key to help retailers plan for the future.”
The Barclaycard study suggested that confidence in the UK economy stayed low, with only 20% of 2,000 respondents to a Longitude Research survey carried out between May 22 and 26 saying they feel positive. More than a quarter (27%) said, however, they were now planning a trip to a garden centre or DIY store.
Esme Harwood, director at Barclaycard, said: “While the restrictions continue to have a significant impact there are glimmers of hope. We are seeing certain sectors start to increase sales as the climate eases and they adapt. It may take some time to recover from the economic impact of coronavirus but household confidence remains high and there is a strong desire among consumers to support businesses.
“Other encouraging signs are also emerging. After weeks of isolating Brits are understandably keen to enjoy the great outdoors. There’s a positive shift for the cafes, pubs and restaurants beginning to open up again, as well as the retailers who stock essentials for barbecues and other socially distanced gatherings.”
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