Covid hit UK retailers battle back but challenges remain

UK retail sales growth continued in June, albeit at a slower rate as the re-opening of hospitality and leisure sectors led to a dilution in consumer spending, according to research from the BRC and KPMG.

On a total basis, sales increased by 13.1% in June (Yo2Y), against a decline of 1.3% in June 2019 (YoY), with 2020 performance stripped out of comparisons because of the closure of stores during Covid lockdowns.

This is above the three month average growth of 10.4% (Yo2Y).

"The second quarter of 2021 saw exceptional growth as the gradual unlocking of the UK economy encouraged a release of pent-up demand built up over previous lockdowns,” says Helen Dickinson, Chief Executive at the British Retail Consortium.

Footfall was down 27.6% in June compared to pre-pandemic levels – almost the same as in May. However all signs pointed to the public making more purposeful shopping trips, with less browsing and more buying. https://t.co/7owEwN18yD
— The British Retail Consortium (@the_brc) July 9, 2021

“In June, while growth in food sales begun to slow, non-food sales were bolstered by growing consumer confidence and the continued unleashing of consumer demand.”

“With many people taking staycations, or cheaper UK-based holidays, many have found they have a little extra to spend at the shops, with strong growth in-store in June.”

“Fashion and footwear did well while the sun was out in the first half of June, while the start of Euro 2020 provided a boost for TVs, snack food and beer.”

UK retail is, however, still facing strong headwinds with many retailers making up for ground lost during the previous coronavirus lockdowns.

City centre retailers continue to suffer low footfall and spending as commuters and international tourist numbers remained well below pre-pandemic levels.

Consumer comfort with the next stage of the roadmap will be key to the ongoing success of retail, Dickinson states.

Many are looking forward to a return to a more normal shopping experience, while others may be discouraged by the change in face covering rules.

“The government will need to reassure the public on safety, while pushing forward with its hugely successful vaccination programme,” Dickinson says.

“The public will also need to be understanding of one another during the easing of restrictions; there has been a big rise in violence and abuse against retail workers during the pandemic and colleagues cannot be put in the firing line because of this change in policy."

Paul Martin, UK Head of Retail at KPMG, comments: “Whilst the high street saw continued growth in June, with sales up 10%, online sales fell back by 7% compared to June 2020.”

“However, penetration rates for online sales remain much higher than their pre-pandemic levels, suggesting the shift to online is here to stay.”