June ONS retail sales reveal full impact of UK coronavirus pandemic
The latest ONS retail figures show growth for the first time since lockdown began at 13.9%. Yet this presents a fraction of what is required to make sufficient inroads into the debt that retail businesses have built up during lockdown says RSM.
Despite continuing record spending on food sales, total retail sales in the quarter to June 2020 showed an overall decrease when compared to the comparative quarter from a year earlier of 12.7%. Record spending continued online at 31.8% despite much of the UK high street reopening in June.
Jacqui Baker, director of retail at RSM, said: ‘Ultimately, online spending is here to stay, and these statistics lay bare the fact that traditional UK bricks and mortar stores continue to bear the brunt of Covid-19.’
This week the firm called on government to urgently consider extending the Corporate Insolvency and Governance Act by three months beyond the current deadline of 30 September to give the UK high street more time to bolster their debt funding and operating models.
Jacqui Baker comments: ‘Sales are heading in the right direction, but these increases are a fraction of where they need to be. 30 September is a critical date for retailers as it sees the end of the rent moratorium, Coronavirus Business Interruption Loan Scheme and the last embers of the furlough scheme. But it is the Corporate Insolvency and Governance Act that will determine the fate of these retailers. Extending it would give them much needed breathing space and prevent a swathe of CVAs from 1 October.
‘The all-important Christmas quarter will be crucial for these businesses and the government will need to get behind them or risk the prospect of ghost-town high streets in 2021.’
In week two of trading post lockdown, footfall was down -49.8% year-on-year in the last week of June compared to 2019. It’s unsurprising then that June’s sales figures were predominantly driven by online at 31.8%. By category, the picture for June is very similar to that of April and May.
Food and drink sales continue to perform strongly with an increase of 5.3% since the start of the pandemic; household goods sales performed well as people continue to invest in home comforts and remote working with an increase of 1.9 per cent, with clothing and footwear continuing to struggle at -34.9% down compared to February 2020.
Jacqui Baker adds: ‘ONS recently reported that total annual pay growth for March to May 2020 fell by 1.3%, which will likely adversely impact income growth rates in FYE 2021. With less money in their pockets; online shopping becoming increasingly seamless; the transformational way in which we shop on the high street, and; mandatory face-covering in shops coming into force today, consumer confidence is likely to stay flat as the public adjusts to this new way of life.
‘With retailers neglected in the chancellor’s summer budget, the government must act now by extending assistance to retailers beyond 30 September, or else a blood bath is sure to ensue.’