UK retail sales suffer record fall in April

British retail sales plunged by the most on record in April despite a surge in online shopping as people stayed at home and non-essential stores were shut.

Analysts said the collapse in activity threatened the survival of many high street stores.

The volume of retail sales in Britain fell 18.1 per cent in April compared with the previous month, according to data from the Office for National Statistics. This is by far the largest drop since records began in 1996 and dwarfs the 5.2 per cent fall in March, the previous record drop.

The slump is larger than the 16 per cent contraction forecast by economists polled by Reuters.

“The effects of Covid-19 have contributed to a record monthly fall in retail sales of nearly a fifth. Fuel and clothing sales fell significantly while spending on food also dropped after the surge from the panic buying seen [in the previous] month,” said Jonathan Athow of the ONS. “Online shopping has again surged as people purchased goods from their homes.”

Compared with the same month last year, sales were down 22.6 per cent, pushing the level to where it was in December 2005.

Online sales rose 18 per cent in April compared with the previous month, sending the proportion spent online to the highest on record, at 30.7 per cent. In April 2019, the proportion was 19 per cent.

Line chart of Great Britain, share of retail sales showing The proportion spent online soared to the highest on record

Online sales rose for most types of shops: food retailers recorded a 56 per cent increase while department stores had a 17 per cent growth. Clothing stores were the only type of shop that reported a fall.

For physical shops, alcohol stores reported a 2.3 per cent jump in sales. In contrast, sales in food stores fell 4 per cent, mainly due to a decline from the strong growth in March, when panic buying caused a rise in sales.

Sales of most other items tumbled, including a 50.2 per cent monthly fall for clothing stores, following a 34.9 per cent drop in March, and pushing the level down to where it was in March 1988, when the series began.

Line chart of Great Britain, index showing Clothing sales are hard-hit by the pandemic

Sales at petrol stations declined by a record 52 per cent, with a similar decline reported by household goods stores and a 25 per cent drop for department stores.

Rules governing store closures relaxed a little in May, with garden centres and DIY shops reopening. Many non-essential shops will be back in business on June 1.

In the first part of May, the decline in spending eased, according to separate figures by Fable Data, a company providing weekly spending data based on bank and credit card transactions. Yet, economists warned that the recovery was likely to be slow.

“A significant recovery in retail sales will have to wait until June, when all non-essential shops are due to reopen,” said Samuel Tombs, chief UK economist at consultancy Pantheon Macroeconomics.

He expects sales to be 5 per cent below pre-virus levels in the second half of the year “reflecting the recent drop in households’ labour income, their usual desire to save more in downturns, and their likely continued reluctance to visit shops where the virus might lurk”.

The slow recovery and shift to online spending will place the future of many high street shops at risk, experts said.

“Come July, consumers who will have remained mainly indoors and in their own neighbourhoods since the start of the lockdown may not recognise the high street, with debt and lack of footfall causing many much-loved businesses to permanently close,” said Duncan Brewer, retail expert at the consultancy Oliver Wyman.

Kerstin Braun, president of Stenn Group, a global trade finance provider, said: “A more robust bounce back will not be immediate, nor will things look the same as before.”

She added: “The retail landscape will be changed forever by the pandemic.”

Separately, the research company GfK said British consumer confidence fell one point to minus 34 in May, the lowest reading since 2009, despite the easing of the lockdown.

“Consumer confidence remains battered and bruised despite efforts at loosening the Covid-19 restrictions,” said Joe Staton, GfK’s client strategy director. “With unemployment claims rising by the highest rate on record and warnings of a severe recession and possible tax hikes, the damage done by the coronavirus pandemic to the UK economic landscape has been laid bare.”

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