UK retail recovery continues, but pandemic still challenges physical stores

By

Sandra Halliday

Published
Oct 23, 2020

Official UK retail sales figures on Friday showed a continuing increase as the Office for National Statistics said September’s retail sales volumes rose by 1.5% compared to August. Volumes rose 4.7% compared to September last year.

Looking at the value increase, spending was up 3.4% year-on-year in September and 6% when petrol was taken out of the mix.

Importantly, it was the fifth consecutive month of volume growth and was actually up 5.5% when compared with February's pre-pandemic level, which is probably the most relevant benchmark in this most unusual of years.

And in the three months to September, retail sales volumes increased by 17.4% when compared with the previous three months. This is the biggest quarterly increase on record, but that's understandable given that sales picked up from record-low levels experienced earlier in the year.

Crucially, while food sales have done best in recent months, non-food store sales made a recovery in September at 1.7% above their February levels.

The recovery in non-food sales is particularly encouraging given that non-food retail was classed as non-essential during the pandemic and suffered sometimes catastrophic sales falls. But the fact that the total non-food sector is now selling more goods by volume than before the pandemic started is good news.

Yet physical stores are still facing challenges especially as the UK heads into a semi-lockdown state. It’s no surprise that physical stores continued to lose out to online sellers last month and the proportion of online sales was 27.5% of total sales, compared with 20.1% reported in February.

Physical stores are clawing back some sales, which meant online saw some falls last month. But those falls remained small and showed that physical shops have some way to go to get back to their previous popularity. For instance, textile, clothing and footwear stores saw their e-sales dipping 1.7% month-on-month. But the fact that they were up 27.7% year-on-year highlights how many consumers still feel more comfortable buying from them online rather than venturing into their shops.