UK retail sales plunged by the most on record in March as a surge in food panic buying for the COVID-19 lockdown failed to offset a slump in non-food sales including clothing.
This is according to the Office for National Statistics (ONS), which today reported a 5.1% drop in sales volumes in March from February, the steepest drop since ONS records began in 1996.
Retail sales volumes fell 5.1% month-on-month in March, with a record 10.1% jump in food sales outweighed by large falls in non-food sales such as clothing and textiles as non-essential retailers pulled down the shutters to comply with the UK Government lockdown on 23 March.
Save for the food sector, the retail picture is dire and is likely to remain so until lockdown restrictions start to ease.
Retail sales volumes excluding fuel dropped by a smaller 3.7% month-on-month in March; this reflected fuel sales dropping 18.9% as the lockdown led to a decline in private transport journeys.
RETAIL’S COVID-19 COLLAPSE
Today’s ONS data covered the period from 1 March to 4 April and thus included two weeks of the shutdown of much of the economy, on course for its deepest recession in more than 300 years according to forecasters.
The British Retail Consortium (BRC) has reported that shopper footfall has fallen by 83% since the Government closed non-essential retail outlets in March and the fundamentals for consumer spending have taken a substantial downturn as a result of coronavirus.
Some people have already lost their jobs, despite supportive government measures, and incomes have also been affected.
Brick and mortar retailers away from the food sector have been devastated by the lockdown introduced to combat the pandemic. Struggling players Laura Ashley, Debenhams and Oasis Warehouse have lurched into administration over the past month.
As demonstrated by positive updates from the likes of web-based fashion wonder Boohoo (BOO:AIM) and homewares leader Dunelm (DNLM) however, online sales are coming increasingly to the fore, albeit they can only compensate for a portion of the lost physical store business.
Tellingly, online sales as a share of total retail sales reached a record 22.3% in March.
THE EXPERTS HAVE THEIR SAY
Howard Archer, chief economic advisor to the EY ITEM Club, commented: ‘Food sales jumped 10.1% month-on-month in March as consumers stockpiled. Clothing and textile sales suffered the most falling 34.8% month-on-month but the weakness in non-food sales was widespread. There were also large month-on-month drops in sales of household goods (8.0%).
‘Online sales as a share of total retail sales reached a record 22.3% in March as many consumers switched to online purchases as coronavirus increasingly impacted.’
Neil Birrell, chief investment officer at Premier Miton Investors, said:
‘No one can be surprised by the steep decline in retail sales in the UK in March. It just adds to a long list of bad data in every part of every economy. It seems, though, that analysts are getting used to the scale, as these numbers were in line with expectations. It is a case of how long can they go on for until they weigh so heavy that they push markets lower.’
Elsewhere, Ayush Ansal, chief investment officer at hedge fund Crimson Black Capital, thundered:
‘This is retail Armageddon. While the January retail sales data showed signs of the Boris Bounce, the March data reflected the Covid-19 collapse. Unsurprisingly, food stores performed well in March and more people than ever started to buy online. The rise in alcohol sales is particularly pronounced and will not go unnoticed. As catastrophic as it is, this data will have been priced in by markets. Everyone saw it coming.’