UK retail sales worst on record as lockdown takes its toll

UK retail sales fell at the fastest rate in March since records began, as the coronavirus pandemic forced people to stay at home and non-essential shops to remain closed.

Sales were down 4.3 per cent compared with the same month last year, marking the sharpest decline since records began in 1995, according to data compiled by advisory services firm KPMG and the British Retail Consortium, an industry body.

The monthly average reflected a 12 per cent growth in sales in the first three weeks of March, followed by a 27 per cent fall after the government-imposed lockdown on March 23.

Line chart of Annual % change on sales value showing UK retail sales contracted at the fastest pace on record

Retail sales fell in March despite a spike in food sales and in online sales of non-food goods, which rose by 19 per cent, well above the annual average of 4 per cent. 

“In March, the necessary measures to fight the spread of coronavirus led to the worst decline in retail sales on record,” said Helen Dickinson, chief executive of the British Retail Consortium.

For bricks-and-mortar retailers, the closure of non-essential shops “led to deserted high streets and high double-digit declines in sales, which even a rise in online shopping could not compensate for”.

Line chart of Annual % change on rolling 3-month average spending value showing UK retail sales contract despite strong food spending growth

Separate data by Barclaycard, which handles nearly half of UK credit and debit card transactions, reflected a similar trend. Between February 22 and March 27, consumer spending fell 6 per cent compared with the same month last year, the steepest fall since the Barclaycard index began five years ago.

Travel expenditure was down 40 per cent and spending in restaurants and bars fell by 36 per cent.

By contrast, Britons unable to leave their houses in most circumstances but with permission to shop for groceries, spent 21 per cent more in supermarkets and 17 per cent more on digital content and subscriptions to streaming services and smart TV boxes.

© Hollie Adams/Getty

Most people said they were saving money by avoiding pubs, eating out and not commuting, while 68 per cent said they felt positive about their household finances, according to a survey of about 2,000 consumers by Barclaycard, carried out between March 30 and April 1.

BRC’s and Barclaycard’s data echo the Visa UK consumer spending index, released on Wednesday, which reported household spending falling at the fastest pace since the series began in 2009, despite the highest spending on food on record.

Consumer spending data were released as the Resolution Foundation, a think-tank, published a report urging the government to strengthen its economic response to the pandemic. 

The report estimates about one-third of the private-sector workforce is jobless or furloughed, a proportion that it estimates could rise to half if the lockdown continues over three months.

A separate report by Centre for Cities, another think-tank, found between 40 per cent and half of jobs in UK cities largely reliant on the aviation industry – such as Crawley, Luton and Derby – were at risk of being furloughed or lost.

In Scotland, workers in Aberdeen were at risk because of expected damage to the oil and gas industry.

“The government must prepare for a scenario in which the numbers of people out of work could far exceed the levels experienced during the 80s and 90s recessions,” said Richard Hughes, research associate at the Resolution Foundation. 

“With the Jobs Retention Scheme already far more widely used than originally expected, the government must ensure it is flexible enough to cope with a longer lockdown, and potentially even greater demand.”

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