Retail teeters on a cliff edge
Covering the four weeks 4-31 October 2020
On a total basis, sales increased by 4.9% in October, against a decline of 0.3% in October 2019*, It is in line with the 3-month average growth of 4.9% and above the 12m average decline of 0.7%.
In October, UK retail sales increased 5.2% on a like-for-like basis from October 2019, when they had decreased 0.9% from the preceding year*. In October, like-for-like has been measured EXCLUDING temporarily closed stores but including online sales.
Over the three months to October, In-store sales of non-food items declined 9.0% on a like-for-like and 11.4% on a total basis. This is better than the 12-month total average decline of 19.6%. For October, the like-for-like excluding temporarily closed stores remained in decline.
Over the three months to October, food sales increased 5.2% on a like-for-like basis and 5.8% on a total basis. This is higher than the 12-month total average growth of 4.2%. For the month of October, food was in growth year-on-year.
Over the three-months to October, non-food retail sales increased by 5.7% on a like-for-like basis and 4.0% on a total basis. This is above the 12-month total average decline of 4.7%. For the month of October, non-food was in growth year-on-year.
Online non-food sales increased by 39.0% in October, against a growth of 3.0% in October 2019*. This is in line with the 3-month average of 39.2% and above the 12-month average of 28.9%.
Non-food online penetration rate increased from 31.7% in October 2019 to 42.3% this October.
* Note 2020 is a 53-week year in the ONS calendar: as a result of the extra week in January 2020, the comparable 2019 performances cited here may differ from those published last year, due to the one-week shift in the comparison.
Helen Dickinson OBE, chief executive | British Retail Consortium: “October saw another month of strong sales growth, with food, gifts and loungewear high on peoples’ shopping lists. Tightening restrictions across the United Kingdom and speculation towards the end of the month of an England-wide lockdown prompted customers to stock up on home comforts and food supplies. The disparity between online and in-store non-food sales widened, with the highest online penetration rate since June. Non-food stores once again experienced double-digit decline due to low footfall as more office workers returned to home working.
“During an incredibly challenging year for the industry, many retailers had finally thought that they were finding their footing. The new lockdown in England will now throw away this progress as we enter the crucial Christmas trading period and we estimate that £2bn of sales per week will be lost this month. It is therefore vital that retailers are able to trade from 3rd December and we are asking government to urgently provide clarity about the criteria for reopening and to ensure that affected businesses are supported in the coming months.”
Don Williams, retail partner | KPMG: “This is an impressive performance by retailers, especially given the tighter household restrictions in October, but testing times lie ahead.
“The gap between winners and losers is stark with home-related items, like furniture and technology, putting in a strong performance whilst the improvement in fashion sales was short lived. Online sales remain high and are set to grow further during Black Friday and lockdown. Not all retailers are in a position to take advantage of this shift in customer behaviour, which has been accelerated by circumstance and for many is now both choice and habit.
“The important ‘golden quarter’ is likely to be unrecognisable this year, with some retailers losing a month’s worth of trading opportunity. Capacity is also likely to be a significant challenge over the coming months as there is a limit to online delivery availability and social distancing has reduced the numbers of customers that can safely shop in store at any one time. In order to survive, retailers must give serious thought to how consumers will engage in the run-up to Christmas.
“Some retailers will thrive in the new environment, others will find it bleak. The locked-in step-up in online activity will undoubtedly lead to further investments in digital capability and partnerships. Digital strategies have never been more vital, but those strategies must be cost efficient too.”
Food & drink sector performance | Susan Barratt, CEO | IGD: “Food and grocery sales continued to perform strongly in October, albeit marginally slower than in September. There was a clear uptick in sales at end of October with retailers benefiting from Halloween falling on a Saturday and shoppers reacting to the impending national lockdown with more than half of shoppers (55%) claiming to have stockpiled over the Halloween weekend. The closure of many out-of-home channels will almost certainly drive additional sales in retail in November.
“A second wave of Covid-19, the three-tier lockdown system in England, rising unemployment and uncertainty about EU exit have all contributed to IGD’s Shopper Confidence Index declining for the second month in a row, hitting its lowest level since May. Confidence is particularly low among lower affluence groups and shoppers in Wales and the North West. The new national lockdown in England will only impact shopper confidence further so expect savvy shopping tactics to intensify in the run up to Christmas.”