“October brought the strongest, non-seasonally adjusted, growth (+8.4%) rate of 2020 to the UK retail sector in a month dominated by Prime Day and earlier Christmas shopping. October is traditionally, due to holding back of spending before the festive period, one of the smaller months in the second half of the year, and indeed spending was down 14.5% in September, but the growth in 2020 served to make October the second largest month since non-essential stores reopened in June.
Despite some media interest in stockpiling, its effect on grocery sales was negligible this time round with grocery sales up 3.9%, marginally ahead of the 3.8% in September. This series runs until 31 October, so the day of the second lockdown announcement that had leaked days earlier, so perhaps some stockpiling demand will have fallen into November but reassurances from retailers and more experience in coping with COVID-19 restrictions clearly led to more sensible purchasing. Again there is no slowdown in online use, indeed local restrictions and the colder weather combined to see growth in online grocery sales accelerate (to 99.0% from 91.6% in September) and penetration of online grow to 10.3% in the month.
Non-food sales dropped back marginally from September, where back-to-school gave a boost, but with sales down just 3.4% October was one of the best months since the COVID-19 outbreak began. Mixed goods, which includes Department Stores and non-food discounters, moved back to stronger growth (+2.4%) for the first time since the outbreak began whilst the decline in fashion (-13.1%) narrowed once more, albeit the category remains the hardest hit.
Household was again the driver, and indeed demand strengthened in the month – a clear indication of pre-Christmas preparations ticking into gear. Growth in furniture accelerated from 4.2% in September to 8.3% in October, whilst DIY remains the standout with 31.7% growth in the month. Household electricals saw a significant jump to 17.3% growth – helped by leading players engaging in rival Prime Day discounts.
Prime Day was clearly a big success. Overall online sales were up 59.7%, the strongest performance since June, and non-store retailers, of which Amazon accounts for roughly half, had their biggest month of the year so far.
So overall, at least from a sales point of view, it was a strong month for the retail sector and underlying demand is holding up well despite the uncertainty. With non-essential retail closed in November, online demand will naturally soar and the final months of the year will be more difficult as consumers battle with COVID-19 restrictions, but there is cause here for tempered optimism that underlying demand will hold up in the final months of the year.”