The post-lockdown bounce back for UK retail continued into a second month in July, though the growth was more attributable to online than the reopening of bricks and mortar High Street stores.
That’s according to the latest BRC–KPMG retail sales monitor, which showed that a Total basis, UK retail sales increased by 3.2% in July, against an increase of 0.5% in July 2019.
That growth was above the 3-month average growth of 0.4% and the 12 month average decline of 1.9% ands was the second consecutive month of growth since the start of the pandemic.
Crucially, online non-food sales increased by 41.0% in July, against a growth of 3.7% in the same month the previous year – this was below the 3 month average of 49.7%, but above the 12 month average of 19.9%.
The overall non-food online penetration rate increased significantly from 29.7% in July 2019 to 42.0% last month.
Paul Martin, UK Head of Retail at KPMG, said: “The release of pent up demand continued in July, with total retail sales growing at 3.2% compared to the same month in 2019. Fortunes were heavily polarised though, and fashion sales continued to suffer despite the summer weather – even online.
“While social distancing restrictions have eased and our daily lives have started to return to a degree of normality, shoppers are still focussed on life at home for the most part. Online sales continue to remain prominent – accounting for over 40 per cent of sales – while food and home focussed categories like furniture, homewares and kitchen accessories remained among the strongest performers. With many of us continuing to work from home, sales of computing equipment soared too.
“September will be the real test for retailers this quarter, traditionally being a month of high volumes driven by the return to school after the holiday season. That said, with the furlough scheme unwinding and wider economic uncertainty set for the autumn, consumer anxiety will likely rise along with it. This will place more scrutiny on disposable income and make life even tougher for retailers.”
Helen Dickinson OBE, Chief Executive at the British Retail Consortium, added: “July saw the second month of growth as lockdown measures eased and demand gradually began to return in some places. Many shops continued to struggle as footfall was down, with many people still reluctant to go out, and fewer impulse purchases. The strongest performance came from food, furniture and homeware, as consumers increasingly invest in their time at home, however, many shops, particularly in fashion, jewellery and beauty, are still struggling to survive. Online sales remained buoyant, slowing only slightly despite more shops reopening.”
“While the rise in retail sales is a step in the right direction, the industry is still trying to catch up lost ground, with most shops having suffered months of closures. The fragile economic situation continues to bear down on consumer confidence, with some retailers hanging by only a thread in the face of rising costs and lower sales. Rents are also continuing to accumulate and the next Quarter Rent Day could see many otherwise viable businesses fall into insolvency, costing stores, jobs and economic growth. The Government should adopt the proposal from landlords and tenants for a Property Bounceback Grant, which would deliver £7 billion in tax revenue to the Exchequer and save 375,000 jobs.”