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UK retail sales recover to pre-pandemic levels

However, the clothing sector remains badly hit by the crisis
August 21, 2020

UK retail sales volumes rebounded in July and sat above pre-crisis levels, according to data from the Office for National Statistics (ONS), with pent-up demand and the continued reopening of stores translating into heightened trading activity. Yet clothing stores remain badly affected by the pandemic, with July sales sitting more than a quarter below February despite a 12 per cent monthly increase in volumes.

Overall retail sales rose 3.6 per cent in July against the prior month. Online and food sales remain at higher levels than before the pandemic. Online appliances retailer AO World (AO) yesterday announced that it had experienced UK revenue growth of more than half in the four months to 31 July, underlining what it views as “a structural shift in demand where customers have found a better way to shop the electricals category”. Earlier this week, Marks and Spencer (MKS) disclosed that its food sales had risen 3 per cent over the past 13 weeks. 

 

Yet the momentum behind both non-store and grocery sales appears to be slowing. Online sales fell 7 per cent last month compared with June, although remain 50 per cent above February levels. The grocery market, meanwhile, experienced a softening in growth during the 12 weeks to 9 August, according to Kantar, with take-home grocery sales growth easing to 14.4 per cent. Compulsory face masks in stores in July appears to have lowered visits. In the week following the introduction of the rule on 24 July, shoppers went to supermarkets 2m fewer times than expected.

The clothing sector has been particularly badly hit by the pandemic, driven largely by a shift towards home working and restrictions on holidays, social gatherings and formal events. Holidays were the second most significant motivator for clothes shopping in summer last year, according to Kantar, accounting for 15 per cent of sales volumes in the 12 weeks ending 30 June. This fell to 3 per cent in the 12 weeks to 28 June 2020. Clothing purchases for special occasions and weddings have been all but wiped out, which has proven especially difficult for the likes of Marks and Spencer.

 

M&S clothing and home sales fell by more than a third in the past 13 weeks. The retailer acknowledged the toll of the closure of offices and a lack of social gatherings, “which meant the clothing sales mix has seen a substantial shift from office dressing and formal wear into casual clothing and leisure wear”. Like its peers, much of its business has shifted online during the crisis, and the retailer is preparing to axe 7,000 jobs, including store personnel.