Retail Sales Volume and Value Increases in the Month of June in the UK

Summary

• Increase in the value sales and volume sales was seen in June by 13.6 per cent and 13.9 per cent respectively compared to that in May 2020
• The total retail sales continued to increase in June, reaching similar levels as pre-pandemic, with a fall of just 0.6 per cent in contrast with February
• Food stores growth was higher by 5.3 per cent in June 2020 in comparison with that in February 2020.
• Fuel sales in June increased by 21.5 per cent as compared to May 2020

On 24 July 2020, the Office for National Statistics, United Kingdom released the data of retail sales of Great Britain for the month of June 2020.

There was an increase in the monthly growth rate for value sales and volume sales in June by 13.6 per cent and 13.9 per cent, respectively, from the month of May. The index for the volume of total retail sales returned to similar levels as before the COVID-19 pandemic because of the second consecutive month of strong growth following record declines in March and April 2020.

On comparing the volume sales with February 2020, it decreased by just 0.6 per cent for total retail. An increase in both value and volume measures for total retail excluding fuel was observed in June when compared with February, in addition to the same month a year ago.

Comparing the figures for the three months to June, with the previous three months, a decline of 11.1 per cent in the value sales and 9.5 per cent in the volume sales was seen. In the same way, there was a decline for both value and volume estimates for three months a year ago also.

The table below represents the main figures relating to the retail sales for June 2020 (Seasonally adjusted, percentage change):

Source: Office for National Statistics, United Kingdom

• Total Retail Sales

Moderate growth was observed in the volume of retail sales up to the beginning of 2019 but flattened out throughout the year and into 2020. A plunge in total sales was seen in mid-March 2020 as the effects of the COVID-19 pandemic hit the retail stores. Non-essential stores reduced or paused their operations, hence the decline continued in a full month of April where many, resulting in the lowest levels experienced since 2005. Stores began to recover from the low levels In May, but sales were still 12.8 per cent lower than in February 2020, before the pandemic.

The total retail sales continued to increase in June in order to reach similar levels as pre-pandemic, with a fall of just 0.6 per cent in contrast with February. Though the total sales level revived in June, a mixed picture for the different store types was seen, depicting that not all sectors have behaved in the same manner.

• Spending within Individual stores in June

Food stores - Consumers were panic buying in view of the impending lockdown. Stockpiling was the reason for increased manufacturing for certain products, including food, because of which, sales returned to a level higher than before the pandemic. Despite a small monthly decline of 0.1 per cent in volume sales in June 2020, food stores remained 5.3 per cent higher in comparison with that in February 2020.

Non-store retailing- Continued growth during the pandemic and a 53.6 per cent increase in volume sales in comparison with February 2020, with non-store retailing reaching a new high level in June 2020.

Fuel- Sales started to recover with the easing of government travel restrictions, increasing by a record of 47.4 per cent. In continuation of this growth in June, fuel sales increased by 21.5 per cent when compared with the previous month. However, sales remained at 30.3 per cent lower than February.

Non-food stores- A robust monthly growth of 45.5 per cent was observed in the volume of sales in June, showing a partial recovery. Non-food stores were at negative 15.0 per cent in volume terms and a negative 15.9 per cent in value terms, when compared with February.

A decline in-store sales by 28.3 per cent was witnessed, while online sales increased by 111.3 per cent. A sharp drop in total sales at negative 34.9 per cent was recorded for the textile, clothing and footwear stores, because of a combination of a significant fall within stores at negative 50.8 per cent along with a slower uptake in online sales, with a 26.8 per cent increase from February. A massive uptake in online sales, with an increase of 103.2 per cent was visible for household goods stores.

The table below depicts the value sales for non-food stores, June 2020 compared with February 2020 (Value sales, seasonally adjusted, percentage change):

Source: Office for National Statistics, United Kingdom

Impact on Retail Stocks

The retail industry is an essential sector of the UK economy, which is going through an elongated period of disruption. The coronavirus pandemic, leading to challenging economic conditions, consumer behaviour, increased internet shopping is changing the operational techniques of the retailers.

Let us have a look at some of the retail stocks and the impact of the pandemic on them.

Burberry Group PLC – It is a manufacturer of luxury goods, dealing in retailing/wholesaling and licensing. On 15 July 2020, the Burberry group released its trading update for Q1 ending 27 June 2020, which indicated that the company suffered a decrease in the retail revenue of 48 per cent to £257 million (Q1 2019: £498 million). Drop in the demand for luxury goods severely impacted the Q1 sales of the company.

Burberry Group PLC (LON:BRBY) stock was trading at GBX 1,132.00 on 24 July 2020, at 3:19 PM, down by 2.45 per cent from its previous close of GBX 1,345.00. The 52-week low/high price was GBX 1,085.00/2,329.00. It was having a market capitalisation (Mcap) of £5,443.33 million.

Tesco PLC – is a leading supermarket providing consumer services. The company had recently released its trading statement for the first quarter of FY20-21. Food sales of the company grew at approximately 12 per cent in the UK because the customers focused more of their purchases on essential items.

Tesco PLC (LON: TSCO) stock was trading at GBX 220.20 on 24 July 2020, at 3:19 PM, up by 1.94 per cent from its previous close of GBX 216.00. The 52-week low/high price was GBX 211.20/258.90. It was having a market capitalisation (Mcap) of £21,153.95 million.

Dixons Carphone PLC - is a retail company of electrical and telecommunications product and services. Dixon released its final result for the financial year ending 2 May 2020 on 15 July 2020. Due to the impact of lockdown restrictions, the company was forced to close down its stores and low sales transfer to online, resulting in a decline in the sales. The revenue generated for the FY19-20 was £10,170 million, which decreased by 3 per cent from £10,433 of FY18-19.

Dixons Carphone PLC (LON: DC.) stock was trading at GBX 77.40 on 24 July 2020, at 3:33 PM, down by 0.90 per cent from its previous close of GBX 78.10. The 52-week low/high price was GBX 60.00/152.45. It was having a market capitalisation (Mcap) of £907.80 million.