UK retail sales edged up in October, marking the first increase over the month in sales volumes since April 2021 when non-essential retailing re-opened. Clothing stores were among those helping to boost growth, with sales now only 0.5% below their pre-pandemic level.

The latest data released today (19 November) by the Office for National Statistics (ONS) shows overall UK retail sales volumes rose by 0.8% month-on-month in October, from a revised unchanged (0.0%) position between August and September.

This is the first increase over the month in sales volumes since April 2021 when non-essential retailing re-opened.

Volumes were also 5.8% higher than their pre-coronavirus (Covid-19) pandemic February 2020 levels.

Non-food stores were the only main retail sector that saw a rise in sales volumes, increasing by 4.2% in October 2021, because of growth in other non-food stores (7.2%), such as second-hand stores, toy stores and sports equipment stores, and clothing stores.

Apparel stores reported an increase of 6.2% over the month with feedback from some retailers suggesting that early Christmas trading had boosted sales. This is supported by analysis within the Coronavirus and social impacts release, which reported that the most common items bought or pre-ordered earlier than usual for Christmas this year included toys and clothes, shoes or accessories. The latest rise means clothing stores sales are now only 0.5% below their pre-coronavirus pandemic level.

Department stores reported an increase in monthly sales volumes of 0.6% and were 2.8% below their levels in February 2020.

Meanwhile, online spending values fell in October 2021 by 0.6% when compared with September 2021. The monthly fall in online spending values resulted in a fall in the proportion of online sales to 27.3% in October 2021, from 28.1% in September.

While this is the lowest proportion of online retail spending since March 2020 (22.5%), it remains far higher than the proportion of online retail spending in February 2020, before the pandemic, of 19.7%.

What the analysts say:

Richard Lim, CEO of Retail Economics, notes that a lacklustre performance across the sector masked a polarisation between the performance of food and non-food retailers.

“Clothing retailers reported signs of earlier Christmas shopping as sales rose significantly on last year’s levels, while a return to the office is likely to have helped too. Elsewhere, with consumers much more confident to dine out than last year, food retailers struggled to match last year’s levels.

“Looking forward, the consumer environment has deteriorated sharply over the last couple of months and the all-important Christmas boost needed for the industry currently hangs in the balance. Decade-high levels of inflation, the prospect of interest rate rises, and growing concerns about personal finances may trigger some to tighten their grip on spending just when the sector needs it the most. Many retailers have battled to secure the goods they need for the vital trading period, so discounting will come as a last resort given profit margins are already under intense pressure.”

‘Golden Quarter’

Lynda Petherick, head of retail at Accenture UK, notes after an unexpected dip in September, retail sales received a much needed, albeit marginal boost last month as consumers began to answer the calls to start their Christmas shopping early this year.

“Retailers will be hoping that consumer spending picks up as we get deeper into the ‘Golden Quarter’ amid fears that inflation, the end of furlough and rising energy prices will continue to squeeze on household spending whilst deterring people from shopping in-store.

“It’s clear we are seeing macro challenges that continue to keep businesses awake at night – particularly across fuel and food industries. The tight labour market means the sector is struggling to hire staff, which is exacerbating supply chain disruptions. By prolonging the seasonal shopping period over several months, retailers will be hoping they can smooth out demand and manage whether they will need to scale supply up or down accordingly. Shoppers locking in their purchases now will not only mean sales in the bank for businesses, but will also help customers avoid disappointment. The concern for businesses will be that demand may taper off the closer we get to Christmas, therefore retailers must ensure they’re making use of all channels to help meet customers’ needs.”

Meanwhile, Oliver Vernon-Harcourt, head of retail at Deloitte, adds the half-term break and popularity of staycations in October have kicked off the Golden Quarter, with retail sales values and volumes both rising month-on-month by 1.6% and 0.8%, respectively.

He notes non-food sales were up month-on-month by 4.2%, adding with larger Christmas gatherings expected as consumers intend to make up for 2020’s lost celebrations, we could see non-food sales accelerate further in the coming weeks, as consumers look for toys, partywear, and other seasonal goods.

“Clothing alone saw an increase of 6.2% in volume compared to the previous month, edging closer to pre-pandemic levels.”

Black Friday

Looking to next week’s Black Friday event, Vernon-Harcourt, says discounting is unlikely to be as deep or extensive as in previous years as retailers delicately balance stock levels.

“Some retailers have already ruled themselves out from participating at all. With fewer deals around than shoppers have become accustomed to over the years, some may find themselves buying more items at full price.

“The good news is that retailers are working hard to make stock available and avoid disappointment by pushing more items in-store. This strategy is helping curtail any temporary fulfilment issues with home deliveries and may see more consumers head to physical stores to get into the Christmas spirit. After last year’s closures, many retailers will be looking forward to welcoming shoppers once again with special in-store Christmas experiences for the season.”

By Just Style