Friday 17 September 2021 9:05 am

Retail sales fall as reopening bounceback runs out of steam

Retail sales volumes dropped 0.9 per cent last month as Brits rushed to dine out at restaurants when lockdown restrictions eased and stores faced supply disruption.

A dip in food store sales of 1.2 per cent and a 1.5 per cent jump in automotive fuel sales suggests that people leaned into post-lockdown freedoms by travelling and eating out.

Businesses were also hit by shortages with 6.5 per cent of companies in the retail industry unable to get the supplies they needed.

Michael Hewson, chief market analyst at CMC Markets UK, said: “The relaxation of Covid restrictions has had a part to play in the slowdown, as supermarket food sales fell back sharply with the reopening of restaurants and other hospitality venues.”

“Nonetheless the last three months have been particularly disappointing when you look at other areas of the economy which appear to have bounced back quite strongly,” he added.

Sluggish sales growth over the past three months, which stood at just 0.3 per cent, has in part been driven by supply chain issues and labour shortages which have buffeted businesses across the UK.

Department stores suffered the most with 18.3 per cent reporting shortages, followed by clothing stores at 11.1 per cent.

Sarah Coles, personal finance analyst at Hargreaves Lansdown said: “Keeping the shelves full was a real battle, especially for department stores, which is one reason why we spent less in these stores in August.”

While the post-lockdown spending bounceback appears to be running out of steam, analysts noted sales continued to surpass pre-pandemic levels, up 7.4 per cent on February 2020.

Shortages on the shelves pushed more people to shop online, strengthening the trend for shopping online which has surged during the pandemic.

The proportion of retail sales online rose to 27.7 per cent in August 2021 from 27.1 per cent in July, substantially higher than the 19.7 per cent in February 2020 before the pandemic.

“Forced savings during the pandemic and cancelled foreign holidays mean that consumers have more to spend on the high street and online,” Lisa Hooker, consumer markets leader at PwC, added.

“This suggests that the increased footfall on high streets last month predominantly benefitted hospitality rather than shops,” she said.

All eyes are now on Christmas as businesses prepare for the festive period amid disruption.

Lynda Petherick, head of retail at Accenture UKI, said: “Retailers will already be concerned as we head into the golden quarter as the horse may have bolted for businesses who haven’t already acted to sure-up their supply chains.

“Order fulfilment and securing stock will be challenging, while many brands could find themselves short-staffed over this busy time.”

Read more: US retail sales smash expectations in August

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