The latest data from the Office for National Statistics (ONS) reveals that UK retail sales are beginning to rebound in January, following a 4% drop in December. Retail sales volumes have increased by 1.9% month-on-month, indicating that the sector is recovering from the setbacks caused by the Omicron variant, which disrupted festive season shopping. In fact, the figures suggest that the sector has almost recovered half of its losses from December. When compared to pre-Covid levels in February 2020, sales volumes were 3.6% higher. However, the year-on-year comparison with January 2020 is not very meaningful due to the lockdown measures in place at that time.
The value of retail sales also experienced growth in January, with a 2% increase on the month. When compared to pre-Covid levels in February 2020, sales value was up by 9.1%. On a yearly basis, it rose by 16.5%. These figures indicate that inflation is impacting the retail sector, as January is typically a month when values would be more subdued due to post-Christmas promotions and clearance sales.
Analyzing specific sectors, non-food stores saw a 3.4% increase in sales volumes month-on-month. This growth can be attributed to increased sales in home improvement, household goods, and garden centers. However, sales volumes in non-food stores were still 1.1% below their February 2020 levels.
Notably, the proportion of retail sales made online declined to 25.3% in January, the lowest level since March 2020. This continues the downward trend that started in February 2021 when the proportion reached its peak at 36.5%. While the decline in online sales may indicate a return to in-store shopping, it’s important to acknowledge that online sales still remain higher than pre-pandemic levels in February 2020 (19.8%).
The significance of online sales becomes evident when examining the challenges faced by retailers with limited online presence, especially clothing stores. Despite a 7.1% increase in sales volumes for department stores month-on-month, they still remained 8% below their February 2020 levels. Clothing stores reported a decline of 5% in sales volumes compared to the previous month and were 12.6% below their February 2020 levels. The ONS suggests that this may be due to less discounting in January 2022 compared to previous years.
While the UK retail sector is showing signs of recovery, challenges persist. Inflation and the shift in consumer behavior towards online shopping continue to shape the industry’s landscape. Retailers with a strong digital presence have fared better, while those heavily reliant on in-store sales have faced greater difficulties. As the sector navigates these challenges, it will be crucial for retailers to adapt and embrace the changing trends in consumer shopping habits.
For more information on UK retail sales, you can refer to the following links (if applicable):
– Link 1
– Link 2
