Retail sales return to growth, consumer spending steadies

Customers gather outside store for summer sale on July 5, 2020 in London, England. (Photo: Anselm Ebulue/Getty Images)

June has marked gradual recovery in the retail sector with sales returning to growth and consumer spending showing smallest decline since the coronavirus lockdown.

Retail sales went up by 3.4 per cent year on year in June on a total basis, according to the BRC–KPMG Retail Sales Monitor, registering the first growth since the lockdown.

Separately, a Barclaycard report has shown consumer spending falling by 14.5 per cent year on year in June, which is the smallest decline since the lockdown began.

The increase in retail sales on a like for like basis excluding temporarily closed stores but including online sales has been 10.9 per cent.

“June finally saw a return to growth in total sales, primarily driven by online as a result of lockdown measures being eased and pent up demand being released,” commented Helen Dickinson, chief executive of British Retail Consortium (BRC).

“Despite footfall still being well below pre-coronavirus levels, average spend was up as consumers made the most of their occasional shopping trips.”

Food sales were in growth year-on-year for the month of June. Sales increased 7.3 per cent on a like for like basis and 3.8 per cent on a total basis over the three months to June.

“The continued warm weather and further easing of lockdown restrictions contributed to another month of high growth in sales for food and grocery retail,” said Susan Barratt, chief executive of IGD.

She said the sector is set to experience more competition for spending from July with more retail and out-of-home outlets now up and running.

Data from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, reveals that spending on essential items grew 6.6 per cent, bolstered by the highest increase in supermarket expenditure since the start of the year.

The supermarket category has seen a rise of 25.7 per cent. Online grocery spend also jumped significantly by 105.9 per cent year on year.

The June figure in essential spending is an improvement of 5.7 per cent compared to May, which saw a 0.9 per cent increase.

Non-essential spend fell 22.3 per cent, less sharply than in May, as the reopening of non-essential shops boosted consumer spending.

“While shoppers remain understandably cautious, slowly but surely Brits are starting to spend again,” said Esme Harwood, director at Barclaycard.

“It also seems shoppers are generally reassured by retailer efforts to take precautions and make their stores safer. As lockdown eases and Brits are encouraged to enjoy summer safely, it’s clear that people are making the most of a sense of normality again, with many of us travelling to see friends and family, eating al-fresco, and taking day trips.”

However, both reports indicate that the high street’s recovery may be a long one.

“Fashion sales haven’t rebounded quite as impressively though, despite reports of increased interest from those prepared to queue to enter stores,” commented Paul Martin, UK Head of Retail at KPMG.

“Retailers won’t be picking up where they left off and months of reduced or no sales will threaten the survival of many. The pandemic has significantly changed consumer behaviour, it’s therefore vital that routes to market and ways of working are adapted with that fact in mind.”

The Barclaycard report reveals that over half (56 per cent) of consumers continue to avoid the shops with 31 per cent admit to delaying shopping because of the fear of contracting or spreading the virus and 18 per cent say they are put off by crowds.

“The government must remain open to further action to boost consumer demand and should take steps to support with rent costs or the industry could suffer thousands of avoidable job losses,” Dickinson said.