Friday 18 September 2020 10:02 am

UK retail sales grow for fourth consecutive month

UK retail sales reached pre-pandemic levels last month, driven by supermarket and home improvement purchases. 

Retail sales were up 0.8 per cent in August compared to the previous month, which was the fourth consecutive month of growth. 

Read more: A New Look for high street retail? Here’s what matters in the Covid-19 world

UK retail sales were up four per cent compared to February, before the coronavirus pandemic hit the country. 

Non-store retailing volumes were 38.9 per cent above February and household goods stores saw sales rise 9.9 per cent.

However clothing stores remained 15.9 per cent lower than February’s levels due to subdued footfall in city centres following months of lockdown.

Online UK retail sales, which have boomed during the pandemic, dipped 2.5 per cent compared to July. 

But the strong growth during the coronavirus lockdown meant sales were still up 46.8 per cent compared to February, according to the Office for National Statistics.

End of furlough approaching

Fidelity International personal investing associate director Emma-Lou Montgomery said: “It’s not all as rosy as it seems and beneath the headline figure is a very mixed bag.

“Online and food retailers continue to perform well, with impressive sales month-to-month. This is while high street shops and non-food retailers contend with deserted city centres and few shoppers and city workers to keep the tills ringing.

“There are some tough decisions in store for retailers. More shop closures and redundancies are inevitable as local lockdowns rise and the end of the furlough scheme draws ever nearer.

Read more: Retail footfall suffers first decline since April as schools reopen

Lisa Hooker, consumer markets leader at PwC, added: “While there is strong evidence of a welcome V-shaped recovery in the retail sector, it’s clear that the headline figures hide mixed performance under the surface. 

“As we approach the run up to Christmas – during which the lion’s share of profits are normally made  – retailers will be hoping that the fragile recovery is not derailed by more widespread lockdowns, rising unemployment or dented consumer confidence.”

Threat of rising cases

Investec analysts said: “Another potential headwind is the rising number of domestic coronavirus cases.

“Reports suggest the government is considering a number of national restrictions, including the possibility of another two-week lockdown in October.

“While the direct impact of enforced closures is evident, it could also weigh on the subsequent recovery if consumer confidence was to take a further knock.”

Fashion stores suffer

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, added: “It’s still extremely tough for many bricks and mortar fashion stores as clothing sales in August were still 15.9 per cent below pre-pandemic levels.

“That is also partly likely to be because city centres remain so quiet. With many people still furloughed or working from home, the impact on shop in streets that used to be crowded with workers has been devastating.

“87 per cent of clothing stores reported a fall in footfall in the government’s most recent business impact of the coronavirus survey, highlighting why so many are struggling to bounce back.”

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