UK retail sales tumble after stores shut in national lockdown

High street retail sales

UK retail sales plunged in January as vast swathes of high street stores kept their doors shut in the latest national lockdown, according to new figures.

The Office for National Statistics (ONS) said retail sales volumes dived 8.2% last month against December 2020 after non-essential retailers shut their doors to customers.

It was significantly worse than analyst expectations, with a consensus of economists predicting a 2.5% decline for the month.

Sales had increased by 0.3% in December as Christmas demand and the relaxation of pandemic restrictions buoyed retailers briefly.

The slump last month was less severe than in the first UK lockdown but retail sales volumes remain 5.5% below pre-pandemic levels from February last year.

Sales were once again buoyed by a surge in online trading, with digital spending hitting a record proportion of 35.2% of all sales.

All sectors saw a decline in sales except for non-store retailers and food retailers, which reported 3.7% and 1.4% jumps respectively.

Jonathan Athow, deputy national statistician for economic statistics at the ONS, said: “Department and clothing store sales were particularly affected this month.

“However, the decrease seen this time was not as large as that of the first lockdown, as some stores have adapted to the current circumstances, with services such as click-and-collect helping to cushion the fall.

“The share of online sales soared to a record high and accounted for over a third of total spending.

“It was also a strong month for food stores, due to the closure of pubs and restaurants.”

It comes ahead of the Prime Minister’s announcement on Monday 22 February, when he is expected to announce when non-essential retailers will be able to open their doors soon as part of the “road map to recovery”.

Chancellor Rishi Sunak is to announce an extension the current business rates relief and furlough scheme into the summer in his budget on 3 March, which will be welcomed by retailers, but a review of the current business rates system will not take place until the autumn.

Analyst reaction:

Retail Economics, CEO, Richard Lim

“Any momentum built up in the run-up to Christmas was deflated by the third national lockdown in January. However, the proportion of online sales reached new heights.

“Consumers now seamlessly transition to lockdown shopping habits, switching to online channels they discovered during previous lockdowns.

“It’s inevitable that some of these behaviours will become a permanent feature of the industry as consumers embrace a new way to shop and the industry boosts online capacity.”

Barclays Corporate Banking, Head of Retail & Wholesale at Barclays Corporate Banking, Karen Johnson

“Although these results are the first of the new year, there’s nothing new about the state of lockdown that the UK retail market finds itself in. 2021 has started where 2020 left off, with overall spending down – and the ability of consumers to go out and shop hit hard by the closure of all non-essential stores.

“As with previous lockdowns, there have been some rays of sunshine to report amidst the clouds. Consumers remain committed to improving the surroundings that they find themselves in most at the moment: as spending on items within the home has continued strongly. There have also been some successes to report amongst retailers providing ‘feel-good’ subscriptions that can be delivered to the door, with food boxes and fresh flowers all rising in popularity.

“Looking ahead, retailers will be keen to see how many of these ‘lockdown habits’ continue once restrictions are lifted. Many will also hope that pent up demand for both clothing and beauty will help boost sales, once people are able to go out and socialise again.”