GB retail sales rebound as expert warns of reduced consumer spending

Out-Law News | 15 Sep 2020 | 1:27 pm | 1 min. read

The volume and value of retail sales in Great Britain rose in July 2020 to pre-pandemic levels, but some sectors are yet to recover from the impact of the coronavirus lockdown.

Data released by the Office for National Statistics (ONS) showed that retail sales volumes increased by 3.6% in July 2020 compared to the previous month, and were 3% higher than sales volumes in February 2020.

The value of sales rose by 4.4% in July compared to June, and the value was up 1.7% compared to February.

However, both the volume and value of sales for the last three months were down compared to the same three months in 2019.

Retail expert Tom Leman of Pinsent Masons, the law firm behind Out-Law, said: “Despite increased sales, retailers will be tuned into the long term economic impact of the pandemic, particularly now that the UK has officially entered a recession and a string of retailers have announced redundancies.

“They will be preparing for reduced consumer spending and a renewed focus on lower pricing. They will look back to 2008 and learn the lessons from the rise of the discounters and £1 shops from that time,” Leman said.

“Supply chain measures implemented in preparation for Brexit and the quick innovation and adaptability that we’ve seen as a result of Covid-19 will help the industry meet the challenge over the coming months. Adjustments made now will have to remain for the long-term to ensure they are attracting and retaining customers whilst delivering from an appropriate cost base,” Leman said.

“However, set against the backdrop of social distancing measures, that slow footfall and the impact that will have on the day-to-day consumer activity, retailers will still need robust and clear support from government as they realign their businesses to survive and prosper in these difficult times,” Leman said.

The ONS data showed that non-food and fuel sales have not yet recovered to pre-pandemic levels, although the volume of sales for these sectors rose by 10% and 26.2% between June and July.

Clothing stores are recovering more slowly than other store types, with the volume of sales still 25.7% lower than February. Meanwhile, household goods and other non-food stores are recovering better from the reduction in sales caused by the lockdown, with sales volumes 6% and 2.2% respectively above February 2020 levels.

Fuel sales remained dented by a reduction in road traffic. The latest Department of Transport data showed that car road traffic remained around 17 percentage points lower in July than in February.

The ONS also said July had shown a contraction in sales for food and non-store retailing, which it attributed to the increasing number of restaurants, bars and physical retail shops reopening. The volume of sales in food stores was still 2.4% higher than February, and the volume of sales for non-store retail was 49.2% higher than before the March lockdown.