UK retail sales soar for fifth straight month, exceed expectations

Summary

• Retail sale volumes rose by 17.4 per cent between July and September 2020.
• Retail volumes saw a growth by 1.5 per cent in September as compared to the volumes in August numbers.
• Non-food sales rose by 3.8 per cent in September, following August's 2.8 per cent increase, with clothing and footwear posted a growth of 3.3 per cent.

The Office for National Statistics said UK retail sales registered a growth for the straight fifth month in September. According to the official figures, retail sale volumes rose by 17.4 per cent between July and September. In September alone, the retail sales volumes grew by 1.5 per cent month-on-month as compared to the volumes in August.

 Notably, the retail sales volumes seen in September were 5.5 per cent higher as compared to the level seen in the pre-pandemic month of February.

Key highlights

A look at the key highlights of retail sales recovery for the month of September 2020.

• The retail sales volumes have witnessed a major recovery in the quarter ended on 30 September as compared to the previous quarter with the retail sales logging a record quarterly rise in the percentage terms.
• The retail sales volumes surged by 17.4 per cent in the three months to September as compared to the three months to June of this year.
• The value of total retail sales in September rose 3.9 per cent in contrast to the pre-pandemic levels of retail sales seen in February this year.
• The continuous uptick in the sales of home improvement items along with a spurt in sales of household goods and garden items steered the monthly sales to a continuous surge in the fifth month.
• The sales of non-food items recorded a recovery of 1.7 per cent over the February levels, while the clothing sales volumes in September were 12.7 per cent below February.
• The record low retail sales in the June quarter due to the then restrictions amid the coronavirus pandemic is one of the main reasons for the sharp surge in the retail sales in the September quarter.
• The ceaseless support from the sale of food items in the recent months following the low number of people willing to eat out has strengthened the retail sales figures.
• Interestingly, the consumption of online sales has also seen a gradual growth in the September quarter with the proportion of monthly online sales rising at 27.5 per cent as compared to 20.1 per cent in the month of February this year.

Amid the four major retail sectors, fuel and clothing did not grow desirably as compared to February primarily due to travel restrictions, extended work from home culture and others. 

The retail fuel sales volumes in the month of September were 8.6 per cent lower than the volumes in February, while the non-food stores recorded a recovery in retail sales with the sales volumes of food stores and non-store retailing prevailing at higher levels than the volumes seen in February.  The volumes of retail sales may see a further spike from the present levels as the government has placed more restrictions on the hospitality venues. 

In September, the volume sales for the food stores were higher by 3.7 per cent as against the volume sales seen in February, while the volume sales within non-store retailing in September were higher by 36.6 per cent as compared to the figures of February. 

According to the various food retailers, the peak in sales of food items in March was largely panic buying due to the coronavirus pandemic. A fall in the sales of the food items has been recorded in the following months but the spending has remained high.   

The reimposition of several restrictions by the government with regard to the opening up of restaurants and bars at the end of September have seemingly kept the sales of food items at a higher level. 

Focus shifts to October

Going ahead, a further recovery in the sales volume of the present month will be highly appreciated which can further assist the business and economic activity to pick up. The focus will remain on the monthly retail sales figures in October as a drop in consumer spending from here may retrace back the steps of recovery. 

A possibility of lower consumer spending in the recent future can be seen with the rising unemployment and the persisting burden over government to restrict the number of job losses. The consumer spending and the relative footfalls may take a hit after October as the government-backed furlough scheme is set to end on 31 October. 

A cautious and restricted spending cycle in the months to December can turn out as a deadly roadblock in the growth story of the United Kingdom with the nation heading towards the festive season where manufacturers, automakers, consumer goods companies, and electrical appliances makers are eyeing a sharp uptick in the sales. However, the sales of food items and other essential commodities is likely to remain high with the ongoing restrictions in place.