According to reports from the British Retail Consortium (BRC) and Barclaycard, UK retail sales have seen a significant increase, with fashion playing a key role in driving growth. However, the industry is bracing itself for potential disruptions caused by the Omicron variant of Covid-19.
The BRC-KPMG Retail Sales Monitor revealed a 5% rise in total sales compared to the same period last year, which saw only a 0.9% growth. Like-for-like sales increased by 1.8% year-on-year, and non-food retail sales were up 3.9%, or 0.9% on an underlying basis. Surprisingly, online non-food sales experienced a decline of 17.9% as consumers returned to physical stores. Within these figures, fashion-related categories stood out as top performers.
Helen Dickinson, CEO of the BRC, highlighted the impact of colder weather on consumer spending habits, stating that consumers took advantage of discounted clothing as they prepared their wardrobes for the cold weather. Jewellery and watches were the best-performing categories, followed by clothing and footwear. Computing, on the other hand, fared the worst.
Barclaycard’s report, which covers broader consumer spending, not just retail sales, revealed the highest increase in spending on non-essential items since before the pandemic, with growth observed across multiple sectors. Spending on non-essential items saw a rise of 17.7%, and in-store retail spend increased by 6.7%. Clothing experienced its largest uplift (+11%) since the pre-Covid period, as shoppers stocked up on warmer winter items.
With Christmas approaching, a significant number of consumers (37% of those who celebrate the holiday) stated that they were purchasing gifts earlier than usual. This trend correlated with a substantial increase in spending at specialist retailers such as gift shops, toy shops, and jewellers, which saw a rise of 21.1%. Other categories benefiting from increased expenditure included sports and outdoor retailers (+28.8%), as well as pharmacy, health, and beauty (+16.5%).
Despite the positive sales figures, concerns about long-term financial stability persist among UK consumers. A staggering 88% expressed worries about rising household and energy bills, while 87% were concerned about increasing inflation. This focus on inflation may explain the 0.1% decline in department store spending, juxtaposed with a notable surge of 26.2% in discount store spending.
It is important to note that these reports were published before the discovery of the new Omicron variant. Already, the travel industry has been severely impacted, and similar consequences for fashion retail could arise if restrictions are imposed. There have been reports of people returning to remote work and the cancellation of numerous Christmas parties and events due to this variant. These developments could significantly affect sales of partywear in the upcoming weeks.
Useful links:
1. BRC – UK retail sales report
2. Barclaycard – Impact of Omicron on retail spending
