Shoppers continued to spend strongly online last month, with ecommerce surging at a pace that slowed only slightly as shops reopened, new figures from the BRC suggest. However, the figures suggest while online sales took off, in-store non-food sales were down by more than a quarter compared to last year, and overall retail sales grew by 3.2% in total, compared to last July.
Meanwhile, figures from Barclaycard suggest that consumer spending fell slightly in July, as shoppers started to spend on non-essential items, and Springboard data suggests that store visitor numbers remain a third down on last year, although they are recovering slowly.
How online grew while in-store spending fell: BRC
The latest BRC-KPMG Retail Sales Monitor for July showed 42% of non-food retail sales took place online, while online non-food sales grew by 41% in July, compared to a year earlier. That represents a slowing in the pace of growth, as non-food ecommerce grew by an average of 49.7% a month in the last three months. Online growth is still well ahead of the 12-month average of 19.9%. In July 2019, 29.7% of retail sales were online and sales grew by 3.7% compared to the previous year.
Across sales channels – and stores remain the primary channel – retail sales grew by 3.2% in total. July was the second month in a row in which retail sales grew compared to last year since the start of the pandemic, with sales both above the average for the last three months (+0.4%), and the last 12 months (-1.9%) – and above the 0.5% increase seen last July.
On a like-for-like (LFL) basis, which strips out the effect of store openings and closures – including temporary closures – UK retail sales increased by 4.3% in July on last time. Last July they were up by 0.3% compared to the previous year.
But a fall of more than a quarter for in-store non-food sales showed the extent to which July’s retail sales growth was driven by strong sales online. In-store sales of non-food fell by 29.3% in total and by 11.3% LFL. That’s behind the 12-month total average decline of 17.7%.
Helen Dickinson, chief executive of the British Retail Consortium (BRC), said: “Many shops continued to struggle as footfall was dow, with many people still reluctant to go out and fewer impulse purchases. The strongest performance are from food, furniture and homeware as consumers increasing invest in their time at home, however many shops, particularly in fashion, jewellery and beauty, are still struggling to survive. Online sales remained buoyant, slowing only slightly despite more shops reopening.”
Overall, non-food retail sales grew by 7.9% on a like-for-like basis in the three months to July, and fell by 4.3% in total, ahead of the 12 month average decline of 6.1%. In July alone, non-food retail sales were in growth.
Dickinson added: “While the rise in retail sales is a step in the right direction, the industry is still trying to catch up lost ground, with most shops having suffered months of closures. The fragile economic situation continues to bear down on consumer confidence, with some retailers hanging by only a thread in the face of rising costs and lower sales. Rents are also continuing to accumulate and the next Quarter Rent Day could see many otherwise viable businesses fall into insolvency, costing stores, jobs and economic growth. The Government should adopt the proposal from landlords and tenants for a Property Bounceback Grant, which would deliver £7 billion in tax revenue to the Exchequer and save 375,000 jobs.”
Food sales put in their strongest showing for 11 years, since June 2009, with sales up by 8.2% LFL and by 6.1% in total compared to the same time last year.
Paul Martin, UK head of retail at KPMG, said: “The release of pent-up demand continued in July,with total retail sales growing at 3.2% compared to the same month in 2019. Fortunes were heavily polarised though, and fashion sales continued to suffer despite the summer weather – even online.”
He added: “September will be the real test for retailers this quarter, traditionally being a month of high volumes driven by the return to school after the holiday season. That aid, with the furlough scheme unwinding and wider economic uncertainty set for the autumn, consumer anxiety will likely rise along with it. This will place more scrutiny on disposable income and make life even tougher for retailers.”
The shape of consumer spending: Barclaycard
Spending on essential items (+3.2%) grew in July, compared to the same time last year, according to the latest Barclaycard report, while outlay on non-essential items fell (-4.7%) at a rate that, nonetheless, represented an improvement since June (-22.3%). That upturn came as shoppers bought more locally (+43.3%) and ordered takeaway meals (+20.4%). Sales remained low year-on-year at restaurants (-64.2%) and bars and pubs (-43%), although this was an improvement on June when sales were down by -86% and -93% respectively.
One in three (31%) of 2,001 consumers surveyed by Longitude Research on behalf of Barclaycard said they were actively trying to boost hospitality businesses, including using the Eat Out to Help Out scheme. Meanwhile, shoppers aged 55 and over said they felt more comfortable going back to shops now that face coverings are mandatory.
Esme Harwood, director at Barclaycard, said: “Consumer spending has warmed up alongside the up alongside the weather, as Brits return to the shops for non-essential items. It’s a welcome development for retailers to see spending up across many sectors in the first full month of data since lockdown restrictions started to ease.
“However, a sense of cautiousness still prevails. While some consumers feel more comfortable returning to shops, others are still wary of taking public transport and travelling outside the UK, with fears and uncertainties lingering about returning to normality too quickly.”
Store visitor numbers fell by 34% last week compared to the same time last year, according to Springboard. However they improved by 3.8% compared to the previous week, with footfall up in high streets (+4.5%), shopping centres (+3%) and retail parks (+3.3%). During the Eat Out to Help Out scheme, which runs Monday to Wednesday, footfall rose in retail destinations by 18.9% after 6pm, and by 9.6% at lunchtime (12 noon to 2pm).
Diane Wehrle, insights director at Springboard, said the jury was still out on whether the scheme would benefit retail sales. She said: “As the scheme continues throughout August and more Brits enjoy staycations across the UK, time will tell if the government scheme provides the boost that retail destinations across the country require for business survival.”