Retail sales return to pre-Covid levels
Source: Mintel 24-07-2020

UK 24-07-2020

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After record declines in March and April, retail sales (excl. fuel) rose 1.5% year-on-year on a seasonally adjusted basis and 0.3% on a non-seasonally adjusted basis in June 2020 according to the ONS.

The share of sales captured online dropped a little to 31.8% in June 2020 when compared with the record 33.3% reported in May 2020. However this remains significantly up on the 20% recorded in February 2020.

Mintel comment:

“Growth of 0.3% in any other period would seem lacklustre, but in the current situation is a very welcome figure for the retail sector. Grocery (+6.6%) was still the driver, and whilst it is hard to be positive about a 17.4% decline in non-food sales, this is a marked improvement on May (-41.4%).

Household goods stores in particular traded well, with DIY (+12.8%) and electrical household appliances (+13.9%) the standouts. There was also a welcome return to growth in health and beauty (+2.4%). Fashion continues to be the underperformer, even if the 35.2% decline in June was a significant improvement over the 61.1% decline seen in May.

The reopening of non-essential stores has clearly benefited the retail sector, although this did happen halfway through the month. It is worth noting that year-on-year sales at store level were still down 14.5%, which whilst an improvement on the 24.7% decline seen in May shows that we are still far from ‘normal trading.’

Indeed with Mintel’s latest tracker data (16-22 July 2020) showing that 43% of consumers are still trying to limit the time they spend in-store and 44% are still doing more online shopping due to COVID-19 we know this is a trend which will continue into the medium term.

These trends continue to benefit online and in June online demand soared, up an unprecedented 72.7% in the month compared to 57.8% growth in May. Demand for online grocery services shows no sign of easing with June bringing the strongest growth (+128.8%) to date. Non-food sales online were up 76.9% in the month, and what is notable is that across all non-food categories growth in the online channel accelerated. Even in fashion, which had seen online sales decline from March to May, there was a significant return to growth (+33.8%).

What this indicates is that whilst significant numbers of consumers are still holding back on discretionary spending, some are beginning to loosen the purse strings and spending levels are growing. Indeed Mintel’s Financial Confidence Tracker saw a significant improvement in perceptions around current financial status and intention to spend in the next three months in June. Whilst positive, we know that the Government’s support schemes will begin to fall away in the second half. For consumers this is likely to be a short uptick in confidence before reality begins to bite for many in the second half.”