UK retail sales volumes increased in December as stores were allowed to reopen briefly, following the end of the second national lockdown in England, new figures show.
The Office for National Statistics (ONS) said retail sales volumes rose 0.3% last month compared with November. The year-on-year growth rate in the volume of retail sales increased by 2.9% when compared with December 2019.
However, the ONS said estimates of quantity bought in 2020 fell by 1.9% in the largest year-on-year fall since records began in 1997.
Food stores bucked the trend of 2020 with growth of 4.3%, as shoppers continued heading to supermarkets, which remained open as “essential” retailers throughout restrictions. Many also benefitted from the closure of the hospitality sector, with upticks in alcohol sales.
December saw a major boost to clothing stores in particular, the agency said, with strong monthly growth of 21.5% – rebounding from a large fall in November of 19.6%.
High street fashion stores have been hit particularly hard during the pandemic due to enforced closures under Covid-19 restrictions and lockdowns.
Most benefitted from a boost in online sales, which helped soften the falls, but sales in the sector are still 14.2% lower than December 2019 and remain below pre-pandemic levels.
Total online retailing values increased by 46.1% in 2020 when compared with 2019 – the highest annual growth reported since 2008, the ONS added.
Ed Monk, associate director, personal investing at Fidelity international: “[The strong rise in online sales showed that] 2020 was a watershed for how and where we spend our money”.
“The festive period offered little respite for retailers with many still closed due to localised restrictions. It’s a disheartening, if unsurprising, indicator of the impact of Covid-19.”
Lisa Hooker, consumer markets leader at PwC: “In a month where non-essential shops and the high street hospitality industry experienced revolving doors of lockdown, changing tiers, Christmas and finally another lockdown, flat headline retail sales versus November seems almost a miracle.”
Ian Geddes, head of retail at Deloitte: “Despite the challenges that 2020 brought, retail overall has shown some resilience in the final month of the year. Strong performance in grocery and record-breaking online sales for non-food meant that Christmas 2020 was the most digital ever.
“Having entered 2021 under renewed lockdown restrictions, retailers will be looking to consumer behaviours during the pandemic to predict which new trends are likely to emerge, and which will carry over. For some consumers, the move to remote work has strengthened their ability to both save and pay down debts. For others, lockdown periods provided an opportunity to experiment; be that with online shopping, exploring new products at home, or even trying out new looks. Combined with greater consumer interest in buying locally, the question for retailers is where to focus efforts in the year ahead.
“Some consumers will have permanently converted to the convenience of online shopping, accounting for 29.6% of all retail sales this month, and the highest annual growth since 2008. For retailers, this doubles down the importance of an online shopfront and engaging virtual shopping experience. Whilst the role of the physical store will remain competitive, the wider retail landscape will likely see reinvention. A new era of ‘hyper-localisation’ and ‘fast fail’ shops could herald a revived and more relevant high street longer-term.
“For now, pent-up demand is likely to see shoppers out in force once restrictions lift, as we saw in summer at the end of the first lockdown. Crucially, the reopening of the high street will this time coincide with the ongoing vaccine rollout, which should boost consumer confidence and see them return to stores once more.”
Karen Johnson, Head of Retail & Wholesale at Barclays Corporate Banking: “Last month’s Christmas period will already be long forgotten for many of us, however the UK retail industry may well look upon it as a fond memory – with spending up versus the previous year, despite the impact of the pandemic on festivities.
“As lockdown measures prevented people celebrating at bars and restaurants, the public instead opted to enjoy the festive period at home, and so spent heavily on food and drink in December.
“Looking ahead, the industry will be relying on the experience it gained from previous national and local lockdowns to ensure it makes the most of changing consumer behaviours – with retailers hoping that the flexibility of their channels continues to drive retail spending.”
Daniel Whytock, CEO DownYourHighStreet.com: “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.”
Jace Tyrrell, chief executive at New West End Company, which represents 600 businesses on Oxford Street, Regent Street, Bond Street and in East Mayfair:
“Despite a small rise in retail sales in December, the pandemic saw 2020 experience the largest fall in year on year sales in record. Non-essential retail continues to face incredibly tough retail conditions. The majority of which had their hopes of recuperating any profit from the festive period dashed when restrictions increased in December.
“While it is absolutely necessary that public safety takes precedence, today poignantly marks 150 days of shops being shuttered since the start of the pandemic. Retailers that have invested millions in being COVID-secure, only to be forced to close on multiple occasions, through no fault of their own.
“The West End’s businesses have demonstrated immense resilience, but trading conditions have never been more challenging. The Government must provide reassurance and support to retailers in bridging the gap until sales can resume.
“Visitors will come back to the West End. It is an economic powerhouse that drives a global Britain, but we need clarity, commitment and decisiveness from the Government to not only survive, but thrive in our recovery.”