Retail sales unexpectedly fall in May as hospitality reopens
By Michele Maatouk
Date: Friday 18 Jun 2021
(Sharecast News) - UK retail sales unexpectedly fell in May as restaurants reopened and people shifted some of their spending from food stores, although they remained above pre-pandemic levels.
Figures released earlier by the Office for National Statistics showed retail sales declined by 1.4% on the month, versus expectations for a 1.5% increase. Sales at food stores saw the biggest drop, with volumes down 5.7% as the hospitality industry reopened after Covid restrictions eased and people returned to eating and drinking in pubs and restaurants.
Meanwhile, clothing and department stores reported monthly declines of 2.5% and 6.7%, respectively, while non-store retailers saw sales fall 4.2% as restrictions on non-essential retailers eased.
Despite the overall monthly fall, the ONS said that over April and May combined, retail sales were still 7.7% higher than in March 2021, and 9.1% above where they were in February 2020, before the impact of the coronavirus pandemic.
ONS Director of Economic Statistics Darren Morgan said: "Following a sharp increase last month coinciding with post-lockdown reopening, retail sales dipped slightly in May. However, they remain well above both their pre-pandemic levels and those seen in March before shops reopened.
"Food stores sales suffered as feedback suggested the reopening of hospitality meant consumers took advantage of eating out instead. Household goods stores and garden centres fared well as people spent money on improving their gardens in anticipation of the summer and the lifting of restrictions on outdoor gatherings.
"As customers returned to physical stores, online sales fell in May for the third consecutive month, but remain nearly 60% higher than the level seen in February 2020."
AJ Bell financial analyst Danni Hewson said: "Consumers can't spend their cash twice and with more options to choose from in May there's little wonder retail sales figures have dropped a little. People rediscovered the joy of eating out after months of having to settle for takeaways or meal kits and that had a knock on to food sales which fell 5.7%.
"It seemed people had made sure their own wardrobes were summer ready before they turned to their homes and clothing sales were down slightly in May after a huge uptick the previous month. A bit of sunshine and consumers rushed to jazz up their outdoor spaces or indulge in new sports equipment.
"What is interesting is the fall in sales from non-store retailers. People have wanted to get back out on the high street, to touch and try before they buy and in fact across the board online sales dipped. But no-one should assume this means shoppers have kicked the habit, May might have delivered the third monthly fall in a row, but online sales were still 58.8% higher than pre-pandemic.
"Retailers might be a little disappointed that momentum has fizzled a little, but all that socialising does bring opportunities. If people are out and about more there's more chance people will get back to a spot of impromptu buying, lured in by tantalising window displays. There will be disappointment from retailers that social distancing measures will remain in place a little longer but queuing outdoors is less of a hardship when the sun is shining."
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