According to the Office for National Statistics (ONS), retail sales in the UK experienced a decline of 1.6% in August compared to the previous month. This downward trend has been ongoing since 2021 and is primarily attributed to the impact of rising prices and inflation on the cost of living. The decline in sales volumes was observed across all main sectors, including food stores, non-food stores, non-store retailing (predominantly online retailers), and fuel.
Specifically, non-food stores saw a larger decline with a 1.9% month-on-month drop. This decrease was evident in each of its sub-sectors, including a 2.8% drop in “other non-food stores,” a 2.7% drop in department stores, and a 1.1% drop in household goods stores. Clothing stores also experienced a decline, albeit relatively smaller at 0.6%. However, in comparison to pre-pandemic levels in February 2020, clothing stores were down by 5.7%.
Interestingly, despite a 2.6% decrease in sales volumes, non-store retailing remained 24.4% above its February 2020 levels. This emphasizes the significant role of e-tail in the overall retail sector in the post-pandemic era.
Taking a closer look at the data, retail spending in the UK dropped by 1.4% in value in August when excluding motor fuel. The impact of inflation was evident, as volumes (excluding motor fuel) fell by 5% compared to the previous year. Nonetheless, due to higher prices, the value of sales still rose by 3.7%. When excluding petrol, the value of sales in August was 12.4% higher compared to the pre-pandemic period (13.7% higher when including petrol). However, volumes only increased by 1.6%, indicating the significant influence of inflation.
Online sales accounted for 25.7% of total retail sales in August but experienced a 9.5% decline compared to the previous year. E-stores specializing in textiles clothing and footwear saw a 7.4% decrease in sales compared to the previous year and a 2.9% decrease compared to the previous month. Nevertheless, e-fashion sales still accounted for a slightly higher percentage of the total compared to the wider retail sector at 25.8%.
These figures paint a gloomy picture for the retail industry, especially as the crucial Golden Quarter approaches. Industry experts, such as Oliver Vernon-Harcourt, head of retail at Deloitte, express concern about retailers’ ability to meet their expectations during this important period. Rising costs, along with consumer uncertainty about future spending, may pose challenges for retailers. However, the festive season can also be viewed as an opportunity for retailers to showcase their offerings and attract consumer spending.
Useful links:
1. BBC: UK Retail Sales Fall for Fourth Month Running
2. Office for National Statistics: Index of Retail Prices – August 2021
