Retail drives five years’ of digital transformation in 24 tumultuous months

February saw continued UK retail sales growth, although it was dampened somewhat by Storm Eunice and falling consumer confidence, according to research from the BRC and KPMG.

On a total basis, sales increased by 6.7% in February, against an increase of 1% in February 2021.

This is ahead of the three-month average growth of 6.5% but worse than the 12-month average growth of 11.3%.

Traditional try before you buy products, like furniture and home accessories, as well as fashion and jewellery, continued to be the high flyers as more people returned to stores amid the ending of coronavirus restrictions. 

While online sales remained down on last year, the new spending habits driven by the pandemic have settled into a new normal, particularly for non-food, with four in every ten pounds now spent online compared to three in every ten before the Covid outbreak. 

“Retail has driven five years’ of digital transformation in 24 tumultuous months,” says Helen Dickinson, Chief Executive at British Retail Consortium.

“The future is looking increasingly uncertain, with current demand unlikely to be sustained.”

“Consumer confidence, falling in recent months, will likely tumble further against the backdrop of the current geopolitical events.”

“The cost of living will continue to spiral due to global inflation, increasing energy bills and the rise in national insurance this spring. With households facing lower disposable income, discretionary spend will be one of the first things to feel the squeeze.”

Paul Martin, UK Head of Retail at KPMG, says: “Retailers saw continued sales growth on the high street in February with sales up nearly 7% on last year when the UK was subject to lockdown restrictions.”

“Clothing and footwear categories witnessed the highest growth, most double digits in February as restrictions were lifted and consumers re-stocked wardrobes, heading back to offices and embracing life living with Covid.”

He adds: “As we move into a new phase of managing Covid-19, retailers will be focussed on keeping consumers spending, as the cost of living squeeze threatens the health of the sector.”

“With travel very much re-opened retailers are facing a double whammy of competing for share of wallet at the same time as the cost of living hits a high not seen in at least three decades.”

“As is the case for consumers, retailers also face tough inflationary pressures and will have to make challenging decisions around how to absorb those, or pass them on without losing custom.”

“It could be a challenging time ahead for some in the sector should consumers choose to cut their spending to manage increasing household bills.”