Retail sales fall 1.4% between April and May as lockdown eases

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According to the Office for National Statistics (ONS) retail sales volumes fell by 1.4% in May 2021, compared to April 2021, primarily driven by food store volumes, which fell 5.7% in the same time period.

However, retail sales volumes were 8.3% higher than in the three months to the end of May 2021, compared to the previous three months. Rtail sales volumes were also 9.1% higher than February 2020.

ONS also reported that household goods stores saw the highest growth in sales volumes, up 9%.

As the lockdown began to ease, the proportion spent online decreased to 28.5% in May 2021, down from 29.8% in April 2021. The proportion of retail sales conducted online remains substantially higher than before the pandemic.

Industry reaction

Christophe Pecoraro, Managing Director at PFS Europe said: “Whilst the ONS figures show a decline in retail sales in May from April, it’s good to see that they are still higher than pre-pandemic levels. Interestingly, digital sales crept down across all sectors, suggesting a rebalance of spend as consumers become more confident in returning to brick-and-mortar stores for leisure purposes. In fact, PFS’ recent research found that almost half (49%) of shoppers missed the social aspect of shopping.

“That said, nostalgia alone is not enough to save the high street for good. This novelty will wane, supported by PFS findings that more than one-third (34%) of consumers expect to return to online shopping after the initial buzz has died down, rising to 49% amongst millennials and Gen Z. If they are to remain relevant, high street retailers must rapidly adapt, capitalising on the aspects of physical shopping consumers missed through the lockdown and leveraging them to their advantage. Instead of competing with online, brands must reconcile the two by taking an experience-based approach. The shift from bricks to clicks doesn’t necessarily spell the end for the high street – but rather a challenge to the core functions of the physical store.

“With the potential for a third wave of COVID-19 infections, it’s vital that brands continue to put the customer experience first, making it as easy as possible for consumers to buy their products when and where they feel happiest. To do this, it’s important that brands and retailers have the right omnichannel structure in place, to facilitate this seamless trade-off between physical and digital retail, and even between different retail platforms. Functions such as buy-online, pick-up in-store (BOPIS), buy online and ship-from-store (BOSS) can help to better bridge the gap between channels.”

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown comments: “Shoppers shot out of the traps in April, and after that initial sprint the pace has slowed in May, but plenty of consumers are in the race to spend to spruce up homes and gardens. The fall in retail sales volumes of 1.4% in May was largely driven by a 5.7% fall in food sales. People have clearly been enjoying the novelty of eating at restaurants again and the easing of restrictions on dining indoors is likely to have been a factor drawing in more diners. As a result fewer people filled virtual grocery baskets to the brim, as they took advantage of new found freedoms.

“Consumers are still splashing the cash in a big way in household goods stores on purchases like garden furniture, with sales volumes rising by 9%. Many shoppers are planning on a summer of garden parties, sprucing up their space to entertain friends and family. Other research from the ONS this week showed that shoppers splurged on their credit and debit cards in May with spending increasing by 6 percentage points compared to April 2021. It was the highest level the CHAPS index of credit and debit card spending has been since December 2020.

“Other popular purchases included toys and sports equipment, with sales volumes in stores selling such items rising 7.7%. With a summer of staycations planned, shoppers are stocking up on entertainment for the family, to keep them amused with overseas beach holidays largely out of reach.

“Some fashion fans seem to have had their fill of new styles for now. Clothing stores saw sales volumes decrease by 2.5% and department stores by 6.7%. But during the three months to the end of May sales volumes of apparel were up by almost a third (28.9%) showing that buying clothes is still largely back in fashion, after months of settling for old favourites in the wardrobe.

“We may be booking restaurant tables like crazy, but other more recent data from the ONS overall spending on going out is still lower than before the crisis hit, which is likely to be because only seated patrons are able to be served. In the week up to June 10th, the numbers of seated diners was at 119% of 2019 levels. However, social spending is still 83% of pre-crisis rates, according to the CHAPs indicator of credit and debit card purchases.

“The novelty of spending in physical rather than virtual stores hasn’t yet worn off, with all sectors except food reporting a fall in the proportion of online sales. The slice of the online sales pie decreased to 28.5% down from 29.8% in April. But even so the proportion of retail sales conducted online remains substantially higher than before the pandemic, more evidence that the crisis has brought about a dramatic change to where we want to shop. In comparison with February 2020, the value of total online retail sales in May 2021 was 58.8% higher, whereas in-store sales were 1.3% lower.

“The most recent data from the ONS shows that although more people are returning to stores, many are still shunning high streets and shopping centres. In the week up to 12th June overall footfall was 82% of the equivalent week in 2019, but high street footfall came in at 76% of 2019 levels and shopping centre footfall was even lower, at 73% of pre-pandemic rates. In contrast footfall in retail parks was much higher, reaching 98% of its level in the equivalent week of 2019.

“It seems many shoppers have become used to the ease of parking and the extra space offered, choosing vast warehouse style stores in retail parks, to the smaller boutiques on the high street. It’s still unclear if this will be a long term trend or just temporary until shoppers receive the confidence boost of double vaccinations before they cram into smaller shops once more. For now though many high streets remain quieter compared to before the crisis hit, which will make filling empty shops an even harder task.”

ParcelHero’s Head of Consumer Research, David Jinks M.I.L.T., says: “On the face of it, a 27% increase in sales over May 2020 is great news for the High Street. Scratch the surface, however, and a very different picture emerges. Compared to February 2020, the last month before the first UK lockdown, the value of total online retail sales this May was 58.8% higher, whereas in-store sales were -1.3% lower. You cannot blame a 58.8% swing to online sales on people deciding to go out for a pub meal.

“Despite a steep decline of -5.7% for online sales between April and May, they are still 2% up on May 2020 when everyone was being forced to shop online because of the first lockdown. E-commerce now holds a jaw-dropping 28.5% of the entire market. Online sales made up just 19% of the entire retail spend as recently as January 2020, before the pandemic first hit.

“We are seeing an ongoing shift in the way we shop that High Street retailers cannot ignore. ParcelHero’s own independent research reveals 46% of consumers have no intention of spending as much in stores as they used to do pre-pandemic.

“While the outlook for town centre retailers is certainly rocky, it’s not a horror story, however. An omnichannel sales strategy, embracing both shop and online sales, with both services complementing the other, will help all retailers claw their way back from the clutches of the coronavirus.”

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