Friday 19 February 2021 7:32 am

January retail sales drop 8.2 per cent as third lockdown takes high street 'to the edge of the abyss'

Retail sales volumes dropped by 8.2 per cent last month, compared to December, as the third national lockdown affected sales across the sector.

All sectors experienced a decline in sales last month, except non-store retailers and food stores, reporting growth of 3.7 per cent and 1.4 per cent, respectively, compared to the final month of last year.

Sales were 5.5 per cent lower than before the pandemic in February 2020, indicating that the impact of the latest Covid-19 restrictions was not as large as seen in April 2020, immediately following the first full month of lockdown.

The proportion spent online soared to 35.2 per cent last month, the highest on record, compared to 29.6 per cent in December and 19.5 per cent reported in January of last year.

Read more: US retail sales rebound in the New Year as shoppers spend Covid-19 cheques

Responses

Ayush Ansal, chief investment officer at the London-based hedge fund, told City A.M. this morning that “the third national lockdown has taken the UK high street to the edge of the abyss.”

“For the average British retailer, the reopening of the economy as a result of the mass vaccination programme cannot come soon enough. January always sees a post-festive slump but this decline was far greater than expected,” Ansal said.

He stressed that sentiment on the high street is “about as low as it gets” after nearly a year of the pandemic.

“Consumers are increasingly looking spent-out and the high street is running on fumes as a result,” Ansal noted.

Also commenting on the latest retail figures, Lynda Petherick, Head of Retail, Accenture UKI, told City A.M. this morning that “it’s been an exceptionally challenging start to the year for retailers, with January falling victim to yet another drop in total sales volume.”

“With non-essential retail stripped of all in-store footfall as the UK entered yet another national lockdown, retailers were forced to rely on ecommerce to capitalise on the typical January sales season, with online sales soaring to eat up a large proportion of total retail spend,” Petherick said.

Retailers will be holding their breath for the government’s ‘roadmap’ out of lockdown, to be presented this Monday.

“There is light at the end of the tunnel and businesses can now be thinking about how their long-term strategies can best exploit pent up consumer demand, while balancing exciting and safe instore experiences,” she added.

Read more: What will Boris Johnson’s ‘roadmap’ for exiting lockdown look like?

Harsh reality

Also scrutinising the latest retail figures this morning is Maddy Alexander-Grout, founder of small business national discount scheme MyVIPCard.

“January was one of the bleakest months yet for UK retailers, who were hit by the double whammy of post-Christmas belt-tightening and the latest national lockdowns,” Alexander-Grout shared with City A.M.

“I have spoken to hundreds of local retailers so far this year and the harsh reality is that many are not just close to shutting up shop but are also mentally exhausted,” he added.

Over the past few days, there has been some relatively good news about infection rates dropping, but the fate of smaller retailers will not suddenly transform once the economy reopens, Alexander-Grout continued.

“Even when things return to a relative normal, things will be far from normal as so many smaller retailers will be paying off the debts they have accrued and loans they have taken out during the pandemic for many years to come,” he concluded.

Read more: Rishi Sunak to extend business rates relief and furlough

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