ONS data reveals retail sector suffers worst slump in sales on record

Official figures released today by the Office for National Statistics (ONS) has shown that retail sales fell 1.9% in 2020 compared to 2019, the largest year-on-year fall since records began in 1997.

The news comes after a positive end to the year, with overall sales rising 0.3% in December, when compared to the previous month. Within that, clothing sales rose the most, as they saw a 21.5% increase during this time period.

However, clothing retail for the year on the high street saw a 25.1% fall in revenue, while fuel stores saw a 22.2% drop in sales. Overall,  department stores sales dropped 5.2% in 2020 when compared with 2019.

A statement from ONS read: “During December, there was initially a period of eased restrictions early in the month, however, there followed a number of tighter restrictions to non-essential retail in England, Scotland and Wales later in the month. Feedback from retailers suggested that these enforced closures later in the month affected turnover, though not to the same extent as witnessed in November.”

Impact of lockdown

Due to the various COVID-19 enforced lockdowns experience across the UK in 2020, the value of online purchases increased by 46.1%, the highest annual growth since 2008.

Within this, food and drink (79.3%), household items (73.4%) and department stores (65.9%) all recorded record annual increases in values of internet sales in 2020 when compared with 2019.

According to the ONS data, all sectors of retail reported large increases in total online sales in 2020.

ONS Deputy National Statistician for Economic Statistics Jonathan Athow said: “The increased popularity of click-and-collect and people buying more items from home led to a strong year for overall internet sales, with record highs for food and household goods sales online.”

Industry reaction

Independent retail expert Daniel Whytock, DownYourHighStreet.com said: “The latest statistics show that clothing stores have been hit the hardest, and that’s no surprise. We all know what it feels like to be stuck indoors with nowhere to go. Fashion items are usually purchased in the build-up to events, social gatherings, holidays and even going to work. None of which the majority of the UK/world can do right now.

“Retailers have been forced to focus online or wait patiently to open. Although online is helping many fashion retailers survive, if we’re simply not investing in our wardrobes, sales are likely to continue to be slow. So, I think we’ll continue to see slow growth for fashion retailers for the first quarter of 2021 while we wait for the vaccination to be rolled out.

“Independent retailers are hopeful that the second half of 2021 will make up for a portion of what’s been missed. I believe fashion may see a spike in sales then as consumers have over-purchased on lockdown related goods such as homewares, gadgets and gaming, and groceries. And this spike will be amplified by the fact that we usually see a rise in clothing sales when the restaurant trade is successful – and I expect the nation to be eating out as much as possible once restrictions are lifted!

“If even half of the online growth sticks when retail opens-up again (and I think the percentage will actually be higher), then retailers that have invested in technology through the pandemic will see the benefits of higher revenues generated through a combination of instore and online sales.”

Neil Stewart, Professor of Behavioural Science at Warwick Business School, said: “Spending on the High Street may have risen after the lockdown restrictions eased last year, but it remained well-below post-pandemic levels. There is early evidence of a ‘new normal’, in which shoppers spend 25 per cent more of their money online than before the pandemic. Our analysis suggests the gradual shift towards online spending has been rapidly accelerated in just a few months by pandemic. If that continues, it could obviously have serious implications for high street businesses as they try to recover from the damage caused by the pandemic.”

Susannah Streeter, Senior Investment and Markets Analyst, Hargreaves Lansdown said: “The relentless rise of online sales continued in December, but a small rising tide of sales in the high street ebbed away with incoming coronavirus restrictions. For most retailers it’s the most crucial month of the year to get profit back on track but the large upswing in sales after the pain of the November lockdowns didn’t materialise. Last minute closures in the days before Christmas in many regions came as a bitter blow, and meant the rise of 0.3% reversed only a tiny part of the 4.1% fall triggered by the four week shutdown. Department store sales were hit particularly hard as last minute present buyers were locked away from the shelves offering easy pickings of gifts. Despite the hopes, this was very clearly not a Merry Christmas for most of the high street.

“There was a big bounce back of 21.5% for clothing retailers, with shoppers once again allowed to treat themselves by trying on clothes in store. The easing of hospitality rules in some parts of the country is likely to have helped increase demand, with finally a reason to buy an outfit to wear for a rare evening out of the house. However, it’s nothing like the usual bounce we see in December, so clothing endured the biggest decline in volumes, down 25.1% over the year, a trend which partly explains the collapse of the once mighty Arcadia Group and Debenhams and a string  of other high street names.

“The numbers underline how much of a bashing the retail  has suffered during 2020 with the quantity of items bought down by 1.9%, the largest year on year fall on record. With sales declines of  22.2% fuel forecourts have had a very tough year, underlining the rapid decline in car use due to the working from home revolution.

“Big chains that have mastered the art of selling online via click and collect and deliveries have reaped huge rewards. The value of online retailing sales increasing by 46.1%, the highest annual growth in a decade. Supermarkets in particular have embraced the accelerated shift to digital with food store sales up 79.3%.

“As people have rolled up their sleeves and got stuck into home improvements during lockdowns, DIY retailers have cleaned up, with online sales at household goods sales up 73.9%.

“These trends are not going away anytime soon, with shoppers forced once again to browse the virtual aisles from the comfort of their sofas. With many weeks or even months of lockdown ahead of us, it’s likely these habits will become even more engrained in our psyche as physical stores stay locked and empty.”

ParcelHero’s Head of Consumer Research, David Jinks MILT, said: “The ONS retail figures for December show that the volume of goods bought last month was up just 0.3% on November, unimpressive considering stores were reopened following lockdown in November. Once again, however, home deliveries helped save the day. E-commerce gained 29.6% of all retail sales for the month. Online sales were up an eye-popping 61.4% compared to December 2019 with online food up 126.4% YOY. Brits largely feasted on turkey and trimmings bought online this Christmas.

“The surge in online food sales in December simply reflects a year-long trend. With their online sales up by 79.3%, food stores reported the largest sector increase for the entire year. You have to look hard through these figures to see any sign of a merry Christmas for High Street retailers, but there was one glimpse of hope. December’s online sales actually fell back -6.2% compared to November. The reopening of physical stores after Lockdown 2 in November did encourage shoppers back to the High Street in early December for a brief flurry of shopping.

“In January 2017, ParcelHero released 2030: Death of the High Street, a high-profile report that was discussed in Parliament. We said that, unless retailers developed an omnichannel approach that embraced both online and physical store sales, the High Street as we know it would reach a dead-end by 2030. These latest ONS retail figures show that the coronavirus pandemic has only hastened its demise.”