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‘All Eyes on April’ for UK Retail Recovery

U.K. retailers may breathe a sigh of relief soon as research shows sales inching toward normal levels after a year of constrained spending. According to a newly released report from the British Retail Consortium (BRC) and accounting firm KPMG International, “all eyes are on April” when it comes to a retail recovery.

The groups’ insights revealed that sales increased by 1 percent in February on a total basis, compared with growth of just 0.1 percent during January. The data, collected between Jan. 31 and Feb. 27, also showed that total U.K. retail sales across categories increased by more than 9 percent on a like-for-like basis from the same period in 2020.

What’s more, in the three preceding months, non-food-related retail sales increased by more than 6.6 percent on a like-for-like basis. While sales declined by 5.5 percent on a total basis during that period, the number still beats the 12-month total average decline of about 6 percent.

Web sales of non-food goods—which include lifestyle products like footwear, apparel and home supplies—ballooned by more than 82 percent in February. The growth is especially striking in comparison with 2020’s modest online growth of 3.6 percent from the same period (pre-pandemic), which saw just half the amount of penetration.

Not surprisingly, e-commerce has seen tremendous acceleration in the U.K. throughout the pandemic, with the prior three months averaging more than 68 percent monthly growth. Over the course of 12 months, digital channels saw an average increase of about 49 percent each month, and analysts predict that trend will stick.

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BRC’s chief executive, Helen Dickinson OBE, said that “February saw a return to growth after a disappointing start to the year.” The CEO credited Prime Minister Boris Johnson’s reopening roadmap with a “burst in spending” on everyday items, like school uniforms. Johnson announced in February that schools would begin the process of fully reopening on Monday this week.

The bulk of the country is still in the throes of its third lockdown, though, keeping consumers holed up at home. “With another month of lockdown still to go, online sales were high, rewarding the retailers who have invested digitally,” Dickinson said.

A mid-month commercial holiday also presented an opportunity for shoppers to spend, though Valentine’s Day revelers largely splurged on food items from their local supermarkets as restaurants remained shuttered. Bars and eateries, along with non-essential retailers, are expected to see a loosening of restrictions on April 12. They have been wholly closed to the public since Jan. 6, a circumstance that has caused in-store sales to remain “significantly down,” Dickinson said, “underlining the importance of a successful reopening in April.”

“While the uptick in sales is encouraging, many retailers are concerned about the months ahead,” she added, explaining that retailers have “spent hundreds of millions on making their premises Covid-secure” in anticipation of shoppers’ return.

Dickinson noted, however, that previous reopenings “have shown that demand can be slow to come back,” with many consumers still feeling apprehensive about in-store browsing. “Government has a vital role to play in building up consumer confidence across the country to power the spending-led recovery,” she said.

KPMG head of U.K. retail Paul Martin characterized February’s gains as “the mildest of upturns for the retail sector,” after “a bleak January sales performance” that saw high street stores across the country still shuttered.

Online represented an undeniable bright spot, though, as “consumers continued to nest down for further weeks at home.” Web channels saw strong sales across all categories, he said, “with some even registering triple-figure growth.” That stands in contrast with neighborhood shopping hubs, which saw boutiques selling clothing, health and beauty products “continue to suffer, with sales falling by double figures,” he added.

While the country’s government “threw retailers a lifeline” with a short-term extension of Covid support packages, “conditions will continue to be incredibly challenging as they face subdued demand, thinner margins and rising logistics costs,” he said, “alongside the accelerated structural changes to the sector.”

Still, Martin believes February’s data, along with the recently announced roadmap for an end to the lockdown and continued dissemination of multiple vaccines, represents “a light at the end of the tunnel” for non-essential retail.

“All hopes will be pinned on consumers wanting to break free from home to browse the stores that have been out of bounds for months,” he added. “High streets will be counting down the weeks until they can finally open their doors and hoping consumers swap their slippers for trainers as they start to hit the shops.”