BRC–KPMG: Retail Sales Show Signs Of Growth But Crisis Far From Over

The BRC and KPMG has published its retail sales monitor for June, covering the four weeks 31st May - 4 July 2020.

• On a Total basis, sales increased by 3.4% in June, against a decrease of 1.6% in June 2019*. It is the highest since May 2018**.  Also, it is the first growth registered since the lockdown and above the 3-month average decline of 6.4% and the 12m average decline of 2.1%.  

• In June, UK retail sales increased 10.9% on a Like-for-like basis from June 2019, when they had decreased 2.2% from the preceding year*. In June, Like-for-like has been measured EXCLUDING temporarily closed stores but including Online sales: the figure is primarily driven by Online sales.
   
• Over the three months to June, In-Store sales of Non-Food items declined 46.8% on a Total and 11.3% on a Like-for-like basis. This is worse than the 12-month Total average decline of 16.5%. For June, the like-for-like excluding temporarily closed stores remained in decline.
   
• Over the three months to June, Food sales increased 7.3% on a Like-for-like basis and 3.8% on a Total basis. This is higher than the 12-month Total average growth of 2.7%. For the month of June, Food was in growth year-on-year.
   
• Over the three-months to June, Non-Food retail sales increased by 9.5% on a like-for-like basis and declined 15.0% on a Total basis. This is below the 12-month Total average decline of 6.2%. For the month of June, Non-Food was in slight growth year-on-year.
   
• Online Non-Food sales increased by 48.2% in June, against a growth of 3.3% in June 2019*. This is above the 12-month average growth of 17.1%. 
   
• Non-Food Online penetration rate increased from 33.1% in June 2019 to 50.7% this June.

* Note 2020 is a 53-week year in the ONS calendar: as a result of the extra week in January 2020, the comparable 2019 performances cited here may differ from those published last year, due to the one-week shift in the comparison.
** Excluding Easter distortions

Paul Martin, UK Head of Retail | KPMG

“June saw pent up consumer demand released, with total sales finally back in positive territory – up 3.4% on the same month last year. While the easing of social distancing restrictions is of course welcome news, the challenges and longer-term consequences for the industry have far from disappeared, and not all categories of retail are benefitting from this post-lockdown boom. 

“Food and drink sales have continued to perform strongly, and June’s warmer weather accentuated that further. It also resulted in more Brits purchasing items to make their post-lockdown lives more comfortable, whether that be furniture, toys, or computing equipment. 

“Fashion sales haven’t rebounded quite as impressively though, despite reports of increased interest from those prepared to queue to enter stores. Online sales – while still in a high gear – are cooling a little as high street activity picks up again slowly and cautiously. That said, whether consumers will forego the convenience of online shopping now that they’ve become accustom to it, remains a fundamental question for the future. 

“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.”

Helen Dickinson OBE, Chief Executive | British Retail Consortium

“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. Despite footfall still being well below pre-coronavirus levels, average spend was up as consumers made the most of their occasional shopping trips. Computing, furniture and home improvement all continued to do well as the public invested in home comforts and remote working. However, while categories such as food performed strongly, not all retailers can breathe a sigh of relief, with clothing, footwear, and health & beauty still struggling. All eyes are on next month now that pubs, restaurants and cafes have reopened, in the hope it brings a much needed boost to our high streets and shopping centres.

“Though a month of growth is welcome news, retail is not out of the woods yet. The pandemic continues to pose huge challenges to the industry, with ongoing stores closures and job losses across the UK. The reopening of shops is an important step on the road to recovery, but with months of rent building up, many shops will be forced to close unless action is taken before the next Quarter Rent Day. 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.”

Food & Drink Sector Performance | Susan Barratt, CEO | IGD
“The continued warm weather and further easing of lockdown restrictions contributed to another month of high growth in sales for food and grocery retail. With more opportunities to socialise in the sun and sport back on TV, shoppers have been enjoying BBQs and picnics. However, with more retail and out-of-home outlets now up and running, the sector will find more competition for spending from July. 

“While shopper confidence remains low, the easing of lockdown measures and low inflation has resulted in IGD’s Shopper Confidence Index improving for two months in a row with confidence increasing across most regions in June, particularly Scotland. However, as shoppers grapple with the economic impact of COVID-19, confidence continues to be fragile.”

Source : BRC-KPMG

Image :  I. Salci / Shutterstock.com 1756835096

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