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Retail sales grow at a record pace, driven by spending both online and offline as the economy continues to reopen

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Ecommerce grew strongly in June, helping retail sales across all channels to a record quarter, the latest British Retail Consortium figures suggest. Meanwhile, Barclaycard data on debit and credit card spending shows shoppers returning in-store, and to cinemas, restaurants and bowling alleys. 

Retail sales grew by a total of 13.1% during the month, compared to June 2019, and by 17% on a like-for-like basis that strips out the effect of store – and business – openings and closures, according to the latest BRC-KPMG Retail Sales Monitor. The growth is ahead of the three-month average of 10.4%, At the same time, shoppers spend 31.3% more online on non-food goods than in June 2019 – below the three-month average of 40.3%, but well up from the 1.5% growth seen two years ago. 

The BRC data compares 2021 figures with pre-pandemic 2019 in order to make a more useful comparison with the long-term trend, rather than the turbulence of 2020, when the first Covid-19 lockdowns took place. The report also shows 39.3% of retail sales took place online in June 2021, down from the 49.7% that were online in June 2020. 

Helen Dickinson, chief executive of the British Retail Consortium (BRC), says: “The second quarter of 2021 saw exceptional growth as the gradual unlocking of the UK economy encouraged a release of pent-up demand built up over previous lockdowns. In June, while growth in food sales begun to slow, non-food sales were bolstered by growing consumer confidence and the continued unleashing of consumer demand. With many people taking staycations, or cheaper UK-based holidays, many have found they have a little extra to spend at the shops, with strong growth in-store in June.” She says that fashion and footwear sales were strong in the sunny first half of June, while Euro 2020 saw TVs, snack food and beer sell strongly. 

But, she adds: “UK retail is still facing strong headwinds with many retailers still making up for ground lost during the previous lockdowns. City centre retailers continue to suffer low footfall and spending as commuters and international tourist numbers remained well below pre-pandemic levels. Consumer comfort with the next stage of the roadmap will be key to the ongoing success of retail. Many customers are looking forward to a return to a more normal shopping experience, while others may be discouraged by the change in face covering rules. The Government will need to reassure the public on safety, while pushing forward with its hugely successful vaccination programme. The public will also need to be understanding of one another during the easing of restrictions; there has been a big rise in violence and abuse against retail workers during the pandemic and colleagues cannot be put in the firing line because of this change in policy.”

Paul Martin, UK head of retail at KPMG, says: “Retail sales growth continued in June, albeit at a slower rate as the re-opening of hospitality and leisure sectors led to a dilution in consumer spending.  The fight for share of wallet is underway, as consumers unleash pent up demand for social activities as restrictions in the UK continue to unwind.”

In the three months to June, in-store sales of non-food items fell by 0.1% in total – but were 47% up LFL. That compares to an average decline of 3.1% for the same three months in 2019. Non-food retail sales grew by 12.4% in total and 45.2% LFL, contrasting to a 1.3% total average decline in 2019. Over the same period, food sales grew by 7.9% in total and 9.1% LFL – up from total growth of 1.4% in 2019. 

Susan Barratt, CEO of grocery analyst IGD, says: “The food and drink sector has continued to put in a resilient performance this month; comparisons to 2020 remain challenging thanks to the impact of last year’s lockdown, but sales are still significantly elevated against 2019 levels. As restrictions continue to ease, IGD ShopperVista insight signals a return to more established shopping behaviour; one in five (22%) of shoppers made more trips to stores in June to buy food and groceries, compared to just 15% in May ‘21. As people get out and about more, food-to-go missions are also recovering; 20% of shoppers carried out a food-to-go mission on their most recent trip, compared to 16% last month. As restrictions are lifted and with the end of the working from home directive, it is likely that we will see food-to-go missions continue to recover and grow.”

Barclaycard: shoppers spend on socialising

The June figures from Barclaycard suggest shoppers are returning to stores following their reopening from the third Covid-19 lockdown. Face-to-face retail grew by 9.7% during the month, compared to June 2019, according to Barclaycard analysis of spending on debit and credit cards via its payment processing systems. Supermarkets (+19%) and food and drink specialist stores (+76.4%) also grew strongly. But clothing (+2.8%) and furniture (+26.3%) stores recorded smaller increases than in May – while takings at cinemas, bowling alleys and golf courses, now able to open, are trading at close to 2019 levels, with sales just 1.7% below 2019, recovering from a drop of 28.6% last month. 

A UK consumer survey found 64% of respondents now feel everyday prices are rising – perhaps as inflation has risen or as perceptions of the cost of living change as spending patterns move back towards pre-pandemic levels. Meanwhile confidence in household finances (+70%) and the UK economy (+36%) has held up, thanks, largely to the 55% who feel optimistic about the economy thanks to the vaccine roll-out. 

Consumer spending on travel (+5.4%) and fuel (+3.6%) are both up, while takings at pubs and bars are 38.1% ahead. Spending on non-essentials (+9.4%) is also up, boosted by eating and drinking (+36.7%) on 2019 levels. But at the same time takeaways and fast food sales online purchases (+146%) – including on food delivery apps and services – grew strongly. 

Raheel Ahmed, head of consumer products at Barclaycard, says: “June saw Brits flock back to pubs, bars and beer gardens to watch the football and tennis on the big screens, as the heatwave early in the month encouraged many of us to get out in the sunshine and socialise.

“The start of the Olympics and the expected easing of restrictions later this month should continue to lift spirits and provide more opportunities for get-togethers, whether that’s a weekend break, a meal out or to celebrate sporting victories. It’s great to see Brits making up for lost time over the past year.”

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