Retail sales in the UK experienced a boost in November as consumers geared up for the Christmas season. According to the Office for National Statistics (ONS), sales volumes saw a 1.4% month-on-month increase and a significant 7.2% rise compared to pre-pandemic levels in February 2020. Sales values also saw growth, with a 10.8% increase compared to October and an 11.6% rise against the pre-Covid period.
The fashion sector, particularly clothing stores, stood out with sales volumes in November surpassing pre-coronavirus levels for the first time, recording a 3.2% increase compared to February 2020. Non-food stores also experienced growth, with sales volumes rising by 2% on a monthly basis. This growth was driven by clothing stores (2.9% increase compared to October) and other retail locations (2.8% increase), including computer, toy, and jewellery stores. Retailers attributed this growth to a strong performance during the Black Friday shopping event and the lead-up to Christmas.
Despite these optimistic figures for November, concerns remain regarding the emergence of the Omicron variant. Karen Johnson, Head of Retail & Wholesale at Barclays Corporate Banking, expressed disappointment in the data, noting that while inflation remained high, consumer spending was influenced by the discounts offered during Black Friday. Johnson emphasized that early festive spending did not meet retailers’ expectations.
The discovery of the Omicron variant now casts a shadow of uncertainty over retailers, who fear its impact on consumer confidence. Johnson highlighted the potential shift in consumer behavior from online to physical stores due to delivery issues and product availability. Additionally, retailers need to navigate the increasing costs they face and determine how much they can absorb or pass on to consumers.
Department stores continue to face challenges, with sales volumes declining by 0.2% compared to the previous month and remaining 3.4% below February 2020 levels. Online sales also experienced a decline, accounting for 26.9% of retail sales in November 2021, marking the lowest proportion since March 2020. This trend has been declining since its peak in February 2021. However, fashion-related retailers still secured a significant share of online spending. In November, online sales represented 27.5% of department store total sales, with a 26.9% year-on-year decrease but a 1.4% month-on-month increase. Textile, clothing, and footwear retailers saw online sales account for 25.9% of their total sales in November, experiencing only a 5.9% year-on-year decrease and a 0.6% increase compared to October.
Overall, while November’s retail sales indicate positive momentum for the fashion sector, retailers are keeping a cautious outlook due to the uncertainties posed by the Omicron variant and its potential impact on consumer behavior and confidence. The retail industry continues to grapple with challenges, including rising costs and the need to adapt to changing shopping patterns as consumers navigate the ongoing pandemic.
Useful links:
1. BBC Business
2. Office for National Statistics (ONS) Retail Sales Data
