Retail sales rebound in January

Total UK retail sales increased by 11.9% in January against a decline of -1.3% in January 2021, when non-essential retail stores were closed due to Lockdown 3, but total retail sales grew 7.5% compared to pre-pandemic January 2020.

UK retail sales increased 8.1% on a like-for-like basis from January 2021, when they had increased 7.1%, according to the latest data from the BRC-KPMG Retail Sales Monitor. That was above the three-month average growth of 3.3% and below the 12-month average growth of 9%.

Over the three-months to January, non-food retail sales increased by 11.1% on a total basis and by 6.5% on a like-for-like basis. That was below the 12-month total average growth of 18%. For the single month of January, non-food was in growth year-on-year.

Over the three months to January, in-store sales of non-food items grew 67.6% on a total basis and 54% on a like-for-like basis. That was above the total 12-month average growth of 51.1%.

However, on a two-year comparison to January 2020, over the three months to January 2022 in-store sales of non-food items declined -7.5% on a total basis. That’s worse than the 2019 total average decline of -3.1%.

Online non-food sales decreased by -24.2% during January, compared with growth of 83% in January 2021, when non-essential retail stores were closed, pushing many consumers to buy goods online. On a two-year comparison, online non-food sales increased by 31.8% compared to January 2020.

British Retail Consortium (BRC) CEO Helen Dickinson, said: “It is encouraging to see such strong sales in January, even once inflation has been accounted for. Consumers prioritised home purchases, boosting the sale of household appliances, electronics and homeware. In what may be signs of a return to pre-pandemic trends, furniture was the stand-out performer in January, after transport delays in the Christmas period began to ease.

“Retailers and consumers face challenges in the coming months. Retailers face competition from other spending opportunities as the public flood back to restaurants, cafes and live events. Furthermore, rising inflation, driven by higher costs of production, higher energy and transport prices, as well as other looming price hikes this spring will mean consumers will have to tighten their purse strings.”

KPMG UK Head of Retail Paul Martin commented: “Retailers will be relieved that we started the year without further lockdowns as consumer demand continued strongly on the high street with sales up 11.9% on last year. However, this unusually strong performance for January, which is traditionally a slower month, should be put in the context of last year’s lockdown restrictions.

“Footwear, furniture and jewellery saw strong sales growth in stores, while spending on food and drink, toys and computing all fell during January.

“Unsurprisingly, online sales were down across all categories compared to January 2021, with items for the home seeing the biggest fall in sales volumes.

“With Covid restrictions now eased, and people heading back to workplaces, retailers will be hoping consumer confidence remains robust to help offset the rising cost challenges that they are likely to experience for a while.

“We could see a challenging few months ahead if wider macroeconomic conditions start to squeeze household incomes to the point that they start cutting back on retail spending. Retailers are facing their own inflationary pressures and will need to take tough decisions on whether and how to pass on the increase costs they have been sitting on for some time to consumers facing their own financial challenges.

“We could easily see the health of the sector start to deteriorate if consumers choose to sit on savings to weather the storm.”