UK retail sales tumbled in January as non-essential shops were forced to pull down the shutters in the latest lockdown. Latest data from the Office for National Statistics (ONS) showed retail sales volumes slumped 8.2% in January from December, a far bigger fall than the 2.5% decline economists were forecasting.
This marked the second largest month-on-month fall on record and led to sales volumes to fall 5.9% for January year-on-year. That compared to a 2.9% year-on-year slide in December, presumably as stay-at-home Brits splashed out in the Christmas run-in to lift the gloom.
Optimists grasping for encouragement can at least take some comfort that the return of national lockdown at the start of January didn’t spark a retail plunge of the like seen during the first UK-wide lockdown. This may suggest that retailers that have managed to survive are better able to absorb shocks, such as the sudden closure of non-essential physical stores, and shift business to online channels.
COVID SMASHED HIGH STREET
Covid-19 and its associated lockdowns have been disastrous for the sector, with thousands of retail businesses and jobs lost and many more retailers teetering on the brink.
January 2021 proved one of the bleakest months yet for UK retailers, which were hit by the double whammy of post-Christmas belt-tightening and the latest national lockdowns.
January’s sales were clobbered by the renewed closure of non-essential retailers and the drop was also double the 4% monthly fall during the previous lockdown back in November, indicating that consumers have become more cautious with their spending.
According to the ONS, ‘all sectors saw a monthly decline in volume sales in January 2021 except for non-store retailers and food stores, who reported growth of 3.7% and 1.4% respectively when compared with December 2020.’
The monthly slump masked a material rise in online sales, which rose 9.2% month-on-month and almost 73% year on year in value terms to take the share of online sales to a record 35.2% of total sales.
Howard Archer, chief economic advisor to the EY ITEM Club, commented: ‘The strong indication is that the recurring restrictions on non-essential retailers have given extra impetus to an already rising underlying trend for online sales.’
EDGE OF THE ABYSS
Ayush Ansal, chief investment officer at hedge fund Crimson Black Capital, says the third national lockdown has taken the UK high street ‘to the edge of the abyss. For the average British retailer, the reopening of the economy as a result of the mass vaccination programme cannot come soon enough.
‘January always sees a post-festive slump but this decline was far greater than expected. Sentiment on the high street is about as low as it gets after nearly a year of the pandemic.
‘Consumers are increasingly looking spent-out and the high street is running on fumes as a result.’
