UK retail sales returned to growth in June, boosted by online, food and furniture spending, indicating that pent-up demand from the Covid-19 lockdown could help struggling stores as they reopen.
Retail sales increased by 3.4 per cent in June compared with the same month last year, the first expansion since the lockdown and the fastest pace of growth since May 2018, according to data compiled by advisory services firm KPMG and the British Retail Consortium, an industry body.
Growth was driven by online sales, with online spending on non-food items rising 48.2 per cent in June compared with the same month last year, nearly three times the yearly average.
Food sales continued their strong performance as people dined at home rather than eating out. Spending in that category grew 7.3 per cent in the three months to June compared with the same period last year and was more than double the year’s average.
“June finally saw a return to growth in total sales, primarily driven by online as a result of lockdown measures being eased and pent up demand being released,” said Helen Dickinson, BRC chief executive. “Food and drink sales have continued to perform strongly, and . . . more Brits purchased items to make their post-lockdown lives more comfortable, whether that be furniture, toys, or computing equipment.”
The BRC data, published before official statistics, raise expectations that consumers are spending the savings accumulated during the lockdown, helping to revive the economy.
However, the retail sales rebound is patchy, with fashion sales and those from high street shops underperforming. Months of reduced or no sales “will threaten the survival of many”, said Paul Martin, UK head of retail at KPMG.
Retail is also only one part of total household expenditures. Other forms of spending on restaurants, bars and entertainment only started reopening from July 4 in England.
In June, total consumer spending was still 14.5 per cent below last year’s level, according to data from Barclaycard, which the company claims tracks nearly half of the UK’s credit and debit cards transactions.
Last week, Rishi Sunak, UK chancellor, announced targeted support for the hospitality sector, such as value added tax cuts and subsidised meals to boost low demand from cautious consumers.
“The recent VAT cut and meal vouchers are also a positive sign for the hospitality industry,” said Esme Harwood, director at Barclaycard.
Barclaycard’s figures show that the downturn for restaurants and bars eased in June, with an annual decline moderating to 56.4 per cent in June compared with a 70.3 per cent fall in May, helped by spending on takeaways and fast food that grew to 6 per cent above last year’s level.
Barclaycard also reported online grocery spending doubling compared with June last year, helping to lift supermarket sales to 25.7 per cent above last year’s level. Spending on fuel, home improvements, DIY and furniture also rose compared with May but remained below last year’s levels.