UK retail sales were down in September from the month prior but clothing retailers continue to buck the trend with sales volumes up 4.3% from August.

The latest data released today (22 October) by the Office for National Statistics (ONS) shows overall UK retail sales volumes fell by 0.2% month-on-month in September, following an upwardly revised 0.6% fall in August.

Despite the September decline, volumes were 4.2% higher than their pre-coronavirus (Covid-19) pandemic February 2020 levels.

Retail sales volumes have fallen each month since April 2021 when non-essential retailing re-opened and retail sales reached levels substantially above those before the pandemic. This is the longest period of consecutive monthly falls in the history of this series (which began in February 1996), ONS notes. However, sales remain 4.2% above the level seen before the pandemic (February 2020).

Non-food stores as a whole, meanwhile, saw monthly sales volumes fall by 1.4% in September and were 1.7% below their pre-coronavirus pandemic levels in February 2020. Within the segment, clothing and department stores reported an increase in monthly sales volume of 4.3% and 0.2% respectably. Sales volumes were 5.5% and 5.1% below their pre-pandemic February levels.

Online spending values increased in September by 0.5% when compared with August, largely because of an increase in department stores sales values (3.8%). The monthly increase in online spending values resulted in a slight increase in the proportion of online sales, which increased to 28.1% in September, from 27.9% in August.

This remains far higher than the proportion of online retail spending in February 2020, before the coronavirus (Covid-19) pandemic, of 19.7%, although it is below the peak pandemic level of 36.6% reached in February 2021.

Perfect storm

Lynda Petherick, head of retail, Accenture UKI notes after enjoying a post-pandemic recovery for most of the year, September was a more challenging month for retailers as shoppers tightened their belts amid talk of a cost of living crisis.

“These figures will be no cause for celebration for the sector as we head into the crucial Black Friday and Christmas trading period,” she says.

“There is a perfect storm brewing in the final months of the year as retailers are already facing staffing pressures and supply chain issues. Fuel shortages and wet weather may have dented consumer confidence last month, but the greatest concern will be whether retailers are able to get consumers the products they want – be that turkeys or toys – at a time when price increases may deter consumers from buying in the first place.

“It can’t be ignored that there is also the looming spectre of rising Covid case rates, which could see people shy away from physical retail this winter. This reiterates one of the key lessons from the pandemic – the paramount importance of a seamless and well-prepared e-commerce offer.”

Oliver Vernon-Harcourt, head of retail at Deloitte, adds September saw a slight fall in retail sales values and volumes – down 0.2% and 0.4%, respectively.

“This marks the longest period of consecutive downturn, despite overall sales remaining higher than pre-pandemic levels,” he notes, adding even as more workers returned to the office in September, this was not enough to significantly lift high street footfall.”

He adds: “Overall online sales also lifted this month, accounting for 28.1% of all retail sales. This figure remains high indicating that lockdown shopping habits are continuing, reflecting a new online base. Pressures on travel and convenience as we enter the colder months will likely sustain this online preference, putting Christmas 2021 on track to be the most digital Christmas ever.”

Supply chain nightmare 

Vernon-Harcourt says consumers are keen to make up for last year’s lost Christmas celebrations and, those that can, will spend more money over the festive period.

“Public awareness of supply chain disruption means some consumers have already made a start on gift shopping amid concerns around the availability of some goods.

“However, many retailers have anticipated this, bringing Christmas lines in early to avoid a stock nightmare before Christmas. An extended Christmas shopping period should also ease the usual demand peaks, making it more manageable for retailers.”

Deloitte’s latest Consumer Tracker indicates that pent-up demand as a result of last year’s lockdowns will slow going into the retail sector’s ‘Golden Quarter’.

“Consumers indicate that their net discretionary spending will fall five percentage points over the coming three months. This appears to be more of a ‘normalisation’ of going out expenditure, rather than a drop in food and non-food spending.

“With inflation and the cost of living on the rise, it remains to be seen whether consumer spending changes in the months ahead because they want it to, or because it has to.”

By Just Style