UK retail sales were down in July from the month prior as poor weather and shifting consumer spending demands took their toll. The impact was felt at clothing store retailers where sales volumes fell 2%.

The latest data released today (20 August) by the Office for National Statistics (ONS) shows overall UK retail sales volumes fell by 2.5% between June and July 2021.

Looking more broadly, however, they were up by 5.2% in the three months to July compared with the previous three months and are 5.8% higher when compared with their pre-Covid-19 pandemic February 2020 levels.

Sales volumes were down by 2% at clothing stores between June and July 2021, while department stores were the only store sector to report monthly growth at 0.2%. The decline at apparel retailers comes after a 4.7% drop in sales in June when compared to May.

Compared to July 2020, sales at clothing stores were up by 7.2%.

Meanwhile, the proportion of retail sales online increased to 27.9% in July from 27.1% in June and remains substantially higher than the proportion of online retail spending in February 2020 of 19.8%.

Online sales as a proportion of retail at textile, clothing, and footwear stores amounted to 29%.

‘Pingdemic’ hampers sales

Lynda Petherick, head of retail for Accenture UK and Ireland, notes whilst July may not have been able to hold onto the momentum of overall sales growth triggered by the start of the Euro’s in June, the continued growth of online sales came as the one saving grace to retailers.

“Driver shortages, poor weather, and shifting consumer spending demands, led to a multitude of troubling circumstances for retailers this past month. Staffing problems also posed a significant challenge, but thankfully the exemption for some key workers from self-isolation rules provided a lifeline to some businesses.

She adds: “With these issues likely to continue throughout August, particularly with the easing of travel restrictions, retailers will be looking towards a greater return to the workplace in the hope it jumpstarts the high street economy.”

Jacqui Baker, partner and head of retail at RSM, concurs, adding despite a surge of shoppers hitting the high street on Freedom Day, footfall was down in July with the ‘pingdemic’ hampering retail sales –  keeping consumers at home and leaving some retailers too short-staffed to open the doors.

She says: “Throw in some unseasonal weather and uncertainty around a fourth coronavirus wave as new cases hit the highest level since January 2021, and it’s no surprise that consumer confidence was knocked.”

Baker points out: “The sharp drop in retail sales was driven by a fall in non-food sales of 4.4% despite summer sales and discounting as retailers looked to offload summer stock before the autumn/winter season kicks in.”

Baker explains that August is normally a slow month due to holidays, but this year retailers will be hoping that the thriving staycation market and changes to self-isolation rules for the double jabbed will drive an unseasonal peak in sales to aid the post-pandemic recovery.

Meanwhile, Richard Lim, CEO of Retail Economics adds retail sales softened following the lifting of restrictions and opening up of other parts of the economy.

“Freedom Day saw the last remaining restrictions lifted for hospitality, offering consumers a wider array of places to spend their time and distribute their cash.”

He says: “Apparel performed particularly well as the backlog of weddings and other larger social gatherings filled households’ calendars, giving shoppers a reason to purchase new outfits.”

Lim also points out online sales remained considerably higher than pre-pandemic levels, with the prospect of a permanent shift in shopping habits gaining weight.

He says: “Retailers continue to pivot business models and restructure in order to align to this new reality.”

Sachin Jangam, partner for retail at Infosys Consulting, adds although retail sales volumes fell by 2.5% between June and July, they are still 5.8% higher than the pre-pandemic February 2020 levels.

“Sales were also 5.2% higher in the three months up to July – but keeping this momentum up requires a longer-term strategy. Retailers need to invest in creating personalised, valuable experiences across all touchpoints. This goes further than just offering the products customers need. It’s about providing unique experiences, whether that be rapid same-day delivery or experiential destination stores. To achieve this, retailers need to invest in understanding their customers, by collecting and analysing consumer data through effective digital marketing engagement programmes.

Jangam adds: “Faced with shortages, supply chain delays, and unpredictable weather, forecasting algorithms also need revision. Traditional forecasting techniques, based on historical data and trends may no longer work effectively. Retailers need to show agility in the buying process, especially as the return to travel and work ensues.”

Jangam predicts that as we approach the back-to-school season, we will likely see heightened sales activity linked to last-minute holiday essentials, workwear and schoolwear.