England lockdown “poisons” chances of retail recovery after October revival
Hopes of the slender retail recovery in October continuing have been dashed as “desperate UK retailers face a disastrous golden quarter hammered by a second lockdown and a lack of clarity over Brexit”, BDO said Friday.
That was the damning view from accountancy and business advisory firm, which said the lockdown/Brexit combination has “poisoned any potential recovery”.
It said that while high streets saw signs of recovery in October, a second national lockdown has sent retailers back into “survival mode”.
According to BDO’s monthly High Street Sales Tracker, last month saw an overall like-for-like sales gain of 1.6%, the first rise since January. However, fashion retail again took a hammering and that slender overall gain was mostly down to impressive online demand.
Non-store comparable sales leapt 86%, the best result since June. By contrast, store like-for-likes fell by 27.7% from a marginally positive base of +0.7% for October 2019.
“But this boost risks being undermined by the devastating financial impact of a new month-long lockdown in England. With another closure of non-essential shops, the high street is set to miss critical weeks of Christmas trading”, said BDO.
Although each retail sector recorded a negative in-store result last month, fashion was hit very hard, and like-for-like sales suffered a particular harsh 36.2% decline from a base of +1.7% for October 2019. This was the eighth month of negative like-for-like sales for in-store fashion this year and marks the worst result for the category since July.
Lifestyle in-store like-for-like sales also plunged 19.8% from a negative base of 1.9% last year. The result marks nine straight months of negative like-for-like sales for in-store lifestyle, despite recording one of the best weekly results since March in the second week of October.
Homewares ended its good run, as in-store like-for-like sales for the sector dropped by 6.4%, but from an excellent base of +6.6% last year. Ending a three-month run of either positive or flat like-for-like sales, four weeks of falling like-for-likes during the month confirmed a negative result for October.
Sophie Michael, head of Retail and Wholesale at BDO, said: “October, while difficult, saw green shoots for the high street and signs of renewed consumer spending. A new lockdown that includes the closure of non-essential shops, however, coupled with ambiguity around Brexit, and little time for adaptation, has poisoned any potential recovery. This has landed retailers in a worst-case scenario in the middle of the critical golden quarter.
“High street brands have spent significant sums to ensure their stores are Covid-secure and build consumer confidence to shop in-store; investment that may now feel wasted.
“New lockdown measures will only add to the woes of many struggling retailers. The accelerated shift online has forced retailers to focus on their online channel and operational logistics, and the closure of stores will inevitably lead to an even faster shift to online. Many may find that their infrastructures are just not there to cope with all sales going through this single channel at a time of peak seasonal trading.
“As 2020 comes to a close, the high street will be banking on consumer resilience, but the reality may consist of spiralling confidence and a chaotic end to an already dire year for retail.”
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