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Retail sales continue long, gradual decline in September – while sales shift further online

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The long, gradual decline in UK retail sales continued in September, with shoppers spending 0.2% less than a year ago, and 0.4% less than a month ago, the latest retail sales figures suggest. That’s the longest run of falling retail sales since ONS records began in 1996. When shoppers did buy, they continued to do more of their spending online, with 28.1% of UK retail sales taking place over the internet, according to the ONS Retail Sales report for September.  

That’s up from 27.9% in August – and is well ahead of the 19.7% of sales that were online in February 2020. It’s also well short of peak online sales month February 2021, when 36.6% of sales were online during the third UK Covid-19 lockdown.

In September, shoppers spent 0.2% less than they did a year earlier to buy 2.6% fewer goods, excluding fuel, the report suggests. They spent 0.4% less than they did last month to buy 0.6% fewer goods, again, excluding fuel. That said sales volumes are 4.2% higher than in pre-pandemic February 2020. 

Shoppers have bought less each month since the big reopening from lockdown in April 2021, says the ONS. “Retail sales volumes volumes have fallen each month since April 2021, when non-essential retailing reopened and retail sales reached levels substantially above those before the pandemic. This is the longest period of consecutive monthly falls in the history of this series (which began in February 1996). However, sales remain 4.2% above the level seen before the pandemic.

How shoppers bought across sales channels

Sales fell as shoppers bought less in non-food stores, including household goods (volumes -9.3% month-on-month), including lighting and furniture stores (-14.8%), and ‘other’ stores (-1.7%) – such as chemists, toy stores and sports equipment stores. But shoppers bought more in clothing (volumes +4.3% month on month) and department stores (+0.2%). 

Food shoppers bought 0.6% more food in September, and 3.9% more than in pre-pandemic February 2020. And fuel sales volumes were 2.9% higher in September as demand peaked amid fuel tanker driver shortages. 

How shoppers bought online

Online shoppers spent 2.3% less online in September than they did a year earlier, but 0.5% more than they did a month earlier, in August. That, says the ONS, is primarily thanks to sales growth at department stores. In total, 28.1% of UK retail sales took place over the internet. 

Just over one in 10 (10.6%) food sales were online, with sales growing compared to last year (+2.1%) and month (+0.2%). 

Almost a quarter (24.9%) of non-food sales were online in September, and fell both compared to last year (-2.6%) and last month (-1.3%). 

At department stores, 28.1% of sales were online. Sales fell by 15.3% compared to last year, but grew by 3.8% on last month.

More than a quarter (27.7%) of clothing, footwear and textile sales were online, up by 5.9% on last year but down by 1.9% on last month. 

Just under a quarter (24.8%) of sales at household goods stores were online, with spending lower than both last year (-0.9%) and last month (-3.6%). 

One in five sales (20.7%) at ‘other’ stores were online, a category that also includes electricals retailers, bookshops and jewellers. Sales were down compared to both last year (-1.3%) and last month (-2.4%). 

The largest single category of ecommerce sales are at non-store retailers, which are predominantly pureplay retailers and index at 48% of ecommerce sales, according to the ONS. Here, 84.4% of sales were online, with spending down by 3.5% on last year, but 2% up on last month. 

Industry response

Melissa Minkow, retail industrylead at CI&T, says: “September saw retail sales fall again, dipping by 0.2% – despite the anticipated bump from back-to-school season and more workers returning to the office. In part this is due to the toll supply chain difficulties are taking on retailers as they struggle to keep their shelves stocked, along with the recent fuel shortages impacting deliveries and consumer confidence. However, it’s also not unusual for the period between back to school and the start of the holiday season to be a bit quiet. That’s because consumers tend to slow down their shopping right before they gear up to spend big over the holiday season, since they know deals are right around the corner.

“As we enter the Christmas trading period, retailers must be fully prepared to meet rising demand. To do this, it’s crucial they get their inventory management and omnichannel offerings in order. Avoiding stockouts and accommodating the new ways consumers are shopping should be top priorities, especially ahead of Black Friday weekend. Top retailers have begun incentivising more app utilisation, so we can expect to see some holiday-specific app-based promotions, products, and services, which should boost footfall further over the coming months.”

Karen Johnson, head of retail and wholesale at Barclays Corporate Banking, says: “Retail sales may have fallen again slightly last month but volumes are still over 4% higher than their pre-pandemic levels of February last year and we can expect to see a return to some kind of normality over the next few months.  The pleasant temperatures during most of September, which had the British public heading for days out and more dining out, doesn’t appear to have had the same effect on consumers outdoor shopping intentions though their confidence to continue spending saw online shopping hold its own as expected.

“Looking ahead, retail sales should regather some momentum, particularly in clothing, as more people return to office and also because this winter, unlike last, consumers will actually need a winter wardrobe.  As households look to entertain the extended family and friends once again this Christmas, we can also expect refreshing of home interiors and a reversal of last month’s fall in sales of household goods.  There are clearly pressing challenges for the sector which will have to remain flexible in its response to ongoing supply chain issues and inflationary pressures.”

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