Britain’s retail sales bounce back in February with 2.1% rise

Shops record £27bn in lost sales during pandemic lockdowns

A pedestrian wearing a face covering due to Covid-19, walks past closed shops on a quiet Oxford Street in central London on March 24, 2021. Britain's annual inflation rate unexpectedly fell in February as coronavirus curbs sparked heavy discounting for clothing and footwear, official data showed Wednesday, soothing market concerns over inflationary pressures. / AFP / JUSTIN TALLIS
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UK retail sales bounced back in February, posting a modest rise after a sharp decline at the start of the year when the country was forced to adopt tighter Covid-19 restrictions.

The volume of goods sold in shops and online rose 2.1 per cent in February, a more positive figure than the 8.2 per cent drop in January, but sales were still down by 3.7 per cent year on year, according to data from the Office for National Statistics.

The share of online sales surged to a record high of 36.1 per cent of total retail sales, reflecting the shift in consumer spending behaviour.

Jonathan Athow, an ONS statistician, said retail sales recovered partially in February despite lockdown restrictions, with food and department stores benefitting from essential retail remaining open and budget shops experiencing increased sales.

“Household goods also fared well, with feedback suggesting spending on home improvement and outdoor products boosted sales as consumers prepared for an easing of lockdown restrictions,” Mr Athow said.

“However, clothing stores continue to struggle, with sales down more than half on their pre-pandemic level.”

The overall pick-up in sales still leaves retailers facing a sharp downturn this quarter after a third national lockdown in England and tighter restrictions in other parts of the country sent sales plummeting by 8.2 per cent in January.

While businesses and consumers are adapting better than during the first lockdown 12 months ago, the economy is expected to shrink by more than 3 per cent in the first three months of the year.

Helen Dickinson, chief executive of the British Retail Consortium, said shops have now lost “a whopping £27 billion ($37.2bn) from lost sales during the three lockdowns”.

“This is already impacting retail employment, with 67,000 retail jobs lost between December 2019 and 2020. While the prime minister’s roadmap helped boost spending on back-to-school items, consumer demand remained weak overall,” she said.

The ONS said consumers were spending on home improvements and outdoor furniture as people prepared for lockdown easing, with Prime Minister Boris Johnson allowing groups of up to six people to meet outdoors from March 29.

This was reflected by sales of household goods and spending at department stores, both up more than 16 per cent on the month.

Non-essential retailers are expected to reopen on April 12.

Ms Dickinson said retail remains an essential part in unlocking consumer demand and driving forward the country’s economic recovery.

“It is essential that all retailers are able to open – and stay open – from April 12, and that the government continues to offer necessary support to businesses as many begin the process of trading their way back to growth,” she said.

UK businesses have borrowed more than £180bn through government-backed loans during the crisis, the Treasury said. About 1.6 million companies, accounting for more than a quarter of the UK’s small to medium-sized businesses, have used a pandemic loan from the government.

Retailers, along with hospitality and leisure businesses, are exempt from business rates during the crisis, a scheme set to expire at the end of June.

“The ongoing business rates consultation offers a pathway to supporting investment in retail stores and warehouses, but only if the government acts quickly to fix this broken tax system and its damaging effects on the industry,” Ms Dickinson said.

The Bank of England hopes consumers will splurge the £150bn in excess savings – built up during the pandemic when there were few opportunities to spend – in the coming months, offering a much-needed boost to the economy.

BoE chief economist Andy Haldane said that a “rip-roaring recovery” is possible even if just a small amount of the excess cash is spent.

Retailers suffered another difficult month in March, a survey from the Confederation of British Industry showed, but sales expectations for the month ahead turned positive for the first time since December 2019.

“As we edge towards the reopening of non-essential stores after Easter, retailers will be hoping that the wave of optimism sweeping consumers as a result of the successful vaccine rollout will translate into increased sales,” said Lisa Hooker, consumer markets leader at PwC.

“This is particularly true of categories like fashion that continue to languish at half the levels of this time last year, with few reasons yet to buy a new outfit.”