UK retail sales return to growth in June
By Abigail Townsend
Date: Tuesday 14 Jul 2020
(Sharecast News) - Retail sales rebounded sharply in June, industry research showed on Tuesday, supported by the easing of lockdown measures and booming online sales.
According to the latest BRC-KPMG Retail Sales Monitor, total sales rose by 3.4% in June, compared to a 5.9% slide in May and a 1.6% fall in June 2019. Last month's increase was the highest since May 2018, excluding Easter distortions, and the first growth registered since lockdown.
It is also well above both the three-month average, of -6.4%, and the 12-month average, -2.1%.
On a like-for-like basis, which excludes temporarily closed stores but includes online sales, sales rose 10.9% year-on-year, compared to a 2.2% decrease in June 2019.
Helen Dickinson, chief executive of the British Retail Consortium, said: "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. Despite footfall still being well below pre-coronavirus levels, average spend was up as consumers made the most of their occasional shopping trips."
Best sellers during the month included computing equipment, furniture, DIY, and food and drink, as shoppers continued to focus on home improvement and remote working. Over the three months to June, food sales jumped 7.3% on a like-for-like basis and by 3.8% on a total basis. Both figures were higher than the 12-month average growth of 2.7%.
Clothing, footwear, and health and beauty continued to struggle, however. Non-food retail sales increased by 9.5% on a like-for-like basis in the most recent quarter, but declined 15.0% on a total basis. Sales of in-store non-food items slumped 46.8% on a total basis.
"The pandemic continues to pose huge challenges to the industry, with ongoing stores closers and job losses across the UK. The reopening of shops is an important step on the road to recovery, but with months of rent building up, many shops will be forced to close unless action is taken before the next quarter rent day," Dickinson said.
Paul Martin, UK head of retail at KPMG, said: "Retailers won't be picking up where they left off, and months of reduced or no sales will threaten the survival of many. The pandemic has significantly changed consumer behaviour; it's therefore vital that routes to market and ways of working are adapted with that fact in mind."
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "Some of the pick-up in retail sales likely reflects people completing purchases of durable goods that they postponed during the lockdown. In addition, households likely have rebalanced their spending towards goods and away from services, due to virus risks. Overall spending still is well below its pre-Covid level.
"Meanwhile, a second wave of job losses when the Coronavirus Job Retention Scheme ends, and the looming end to mortgage payment holidays likely will mean that the funds households have left for discretionary spending do not continue to recover into the second half of this year. Accordingly, June's retail sales data probably will turn out to be this year's peak."
Clive Black, retail analyst at Shore Capital, said: "With the re-opening of stores, June saw a notable improvement in UK retail sales, which is pleasing to see.
"We see July, with a full month of store openings, as being more active still and, in all probability, consumer confidence nudging ahead. However, what storm clouds are ahead from an employment household expenditure perspective?"
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