Retail sales fell for fourth months in a row as retailers struggle for supplies, says official data

As per the data released by Office For National Statistics (ONS), retail sales dropped by 0.9 per cent in August after a steeper decline of 2.8 per cent in July. While spending remains above pre-pandemic levels, the dip came as a surprise for economists who had forecasted a rise of 0.5 per cent. 

It is for the first time since 1996 that retail sales have dropped for four months in a row.

Non-food stores also reported one per cent decline in sales volumes, driven partly by department stores, which saw a 3.7 per cent plunge for the month.

Sales of food dipped by 1.2 per cent on the month, as per data by ONS, that cited easing of hospitality restrictions and people raising their spending on social activities such as eating and drinking in restaurants, pubs and bars as the possible reason behind the dip. It is supported by data from Open Table that shows how restaurant reservation has picked up last month amid rebound in social spending reported by credit card providers.

Our latest data show retail sales fell by an estimated 0.9% in August 2021 compared with July 2021.

This is 4.6% higher than their pre-pandemic levels (February 2020) https://t.co/NJVUFX65CO pic.twitter.com/rYoq0wozo4

— Office for National Statistics (ONS) (@ONS) September 17, 2021

ONS also highlighted retailers’ difficulty in procuring supplies due to the ongoing supply chain crisis. 

In the two weeks to August 22, around 6.5 per cent of retailers said they were unable to get the material, goods or services they needed due to ongoing supply chain challenges, with department stores highlighting this as the biggest difficulties as 18.2 per cent of these companies have stressed upon this issue. 

About 22 per cent of food stores said they were able to source products they needed but had to change suppliers or find alternative solutions.

Reflecting a continued boom in online spending since the start of the pandemic, the ONS said the proportion of retail sales online rose to 27.7 per cent in August, up from 27.1 per cent in a month earlier. Online spending had been 19.7 per cent in February 2020, immediately before the coronavirus struck.

Overall, a post-lockdown rush of spending appeared to be waning, while wet weather kept shoppers away from the high street, claimed analysts. Sales also dropped on the month for chemists and toy shops, as well as retailers of computers and sports equipment.

Meanwhile, retailers are entering the busiest time of the year, amid warnings that Black Friday and Christmas could be disrupted by stock shortages.

“Many big retailers have already issued warnings in relation to their ability to get the right products on shelves, while the UK’s Covid-fuelled appetite for online fulfilment will be tested in the run-up to Christmas if current driver recruitment issues aren’t addressed,” Aled Patchett, the head of retail and consumer goods at Lloyds Bank, said.