ONS: Unexpected Retail Sales Decline In August

The ONS has published retail sales data for August, revealing a fourth consecutive monthly decline.

Retail sales volumes fell by 0.9% in August 2021, following a 2.8% fall in July; however, volumes were up by 0.3% in the three months to August compared with the previous three months, and in August 2021 were 4.6% higher than their pre-coronavirus (COVID-19) pandemic February 2020 levels.

Food store sales volumes fell by 1.2% in August 2021, with some evidence to suggest that the further easing of hospitality restrictions had an impact on sales; people increased their social spending such as eating and drinking at restaurants and bars. This pattern is also in line with data on UK spending on debit and credit cards, based on CHAPS payments made by credit and debit card payment processors, which reported a fall in spending on staples (such as food) in August alongside an increase in social spending (such as eating out and takeaways).

Non-food stores reported a fall of 1.0% in monthly sales volumes driven by falls in department stores (negative 3.7%), which have had consecutive months of falls since April 2021, and other stores such as sports equipment and computer stores (negative 1.2%). Non-food stores sales volumes were 0.4% below their pre-coronavirus (COVID-19) pandemic February 2020 levels.  Household goods stores reported a monthly decline of 0.5%, while sales volumes for clothing stores were the only sector to show an increase over the month, at 0.7%.

Automotive fuel sales volumes rose by 1.5% in August 2021 as people continued to increase their amount of travel; however, they remained 1.2% below their pre-pandemic February 2020 levels.

Online spending values increased in August 2021 by 1.5% when compared with July 2021, driven by other stores (5.8%) such as sports equipment stores and computer and telecoms equipment stores, and non-store retailing (2.9%). This resulted in a slight increase in the proportion of online retail spending values, which increased to 27.7% in August 2021, from 27.1% in July.

This remains far higher than the proportion of online retail spending in February 2020, before the coronavirus (COVID-19) pandemic, of 19.7%, although it is below the peak-pandemic level of 36.5% reached in February 2021.

Commenting on the Office of National Statistics retail sales figures for August 2021, Lisa Hooker, consumer markets leader at PwC, said: 

“The post-lockdown bounceback in retail spending appears to be running out of steam, with retail sales slipping back in August compared to July, and barely increasing (+1.4% excluding petrol) compared to this time last year.

“Retail sales fell in almost all categories of spending, and particularly in supermarkets as Britons took full advantage of the re-opening of hospitality, with eating out ahead of last year. 

“However, while the initial pent-up demand has started to ease, retail sales continue to be well ahead of pre-pandemic levels (+7.4% vs. Feb 2020), as forced savings during the pandemic and cancelled foreign holidays mean that consumers have more to spend on the high street and online.

“In fact, the proportion of retail sales online actually nudged up slightly in August to almost 28%, compared with under 20% before the pandemic. This suggests that the increased footfall on high streets last month predominantly benefitted hospitality rather than shops - as witnessed by the mass closure of multiple retailers that we found in our latest Store Openings and Closures report.

“As we head into Autumn, retailers will be hoping that back-to-school and back-to-the-office will be a sign of back-to-normal for consumer demand, and also that the current supply chain pressures ease, as few of them can afford another cancelled Christmas.”

Source : ONS, PWC

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