UK retail sales in June show signs of recovery after covid lockdown

Retail sales in Britain rebounded in June as warmer weather and the easing of lockdown measures encouraged shoppers back to the high street.

Total sales increased 3.4% on the same month last year as non-essential high street shops started to reopen after almost three months of enforced closure.

Despite signs of a gradual recovery taking hold, the latest snapshot from the British Retail Consortium and the accountancy firm KPMG, also revealed significant pressure still remains for high street firms, as many consumers continue to stay away from the shops while health risks remain from Covid-19.

Over the latest three months – a better guide to the underlying trend because it can smooth over monthly changes – sales, excluding food, plunged by 47%.

Separate figures from Barclaycard – Britain’s biggest credit card provider – showed spending on non-essential items was still down by 22% in June compared with a year ago. However, this was a smaller decline than in May, when sales plunged by 37%, as the gradual reopening of shops benefited the retail sector.

The government has urged people to get out and spend money to help reboot Britain’s virus-hit economy, relaxing restrictions and launching a raft of tax cuts and spending measures in last week’s summer economic update to encourage consumers to return to pubs, cafes and restaurants.

Following an unprecedented decline in sales in April during the first full-month of lockdown, several major retailers are struggling to stay afloat. Household names including John Lewis and Boots have announced a string of store closures and thousands of redundancies between them, as Covid-19 threatens to unleash the highest level of unemployment in Britain since the 1980s.

Fears are growing that a VAT cut for hospitality firms, discounts for eating out and a £1,000 bonus for employers who retain furloughed staff – measures announced by the chancellor last week – could fail to prevent firms from cutting more jobs.

Helen Dickinson, chief executive of the BRC, said: “Though a month of growth is welcome news, retail is not out of the woods yet. The pandemic continues to pose huge challenges to the industry, with ongoing store closures and job losses across the UK.

“The government must remain open to further action to boost consumer demand and should take steps to support with rent costs or the industry could suffer thousands of avoidable job losses.”

The latest health check from the retail industry showed that warm weather in June benefited sales of food and drink, with more shoppers enjoying barbecues and picnics. The return of sport on TV – including the Premier League – also led to a rise in sales of home entertainment devices.

However, the BRC and KPMG warned challenges and longer-term consequences for the industry have far from disappeared, and that not all retailers had benefited from an increase in spending last month.

With offices closed and social gatherings still limited, sales of clothing, footwear and health and beauty products continued to struggle.

Despite the reopening of clothes shops and reports of lengthy queues at some outlets, such as Primark and Sports Direct, Paul Martin, head of retail at KPMG said fashion sales remained depressed.

“Retailers won’t be picking up where they left off and months of reduced or no sales will threaten the survival of many. The pandemic has significantly changed consumer behaviour,” he said.

With much of the high street closed since late March, online sales have picked up some of the decline in demand. According to the BRC and KPMG, internet sales of non-food items rose by 48.2% in June – a dramatic leap from 3.3% growth in the same month a year ago.

Barclaycard, which processes nearly half of credit and debit card transactions in the UK as the largest credit card provider, said sales in supermarkets pushed up spending on essential items by 6.6% in June compared with a year ago. Online grocery sales soared by 105.9%.

However, spending on non-essentials fell 22.3%. Barclaycard said more than half of consumers were continuing to avoid the shops. According to a survey by the credit-card provider, almost a third of consumers said they were delaying shopping because they were afraid of getting or spreading coronavirus, while almost a fifth said they were put off by crowds.