The usual festive spending spree that typically has retailers rubbing their hands in glee, has this year left most wringing their hands in despair, and more likely to be muttering “no, no, no”. Christmas 2020 has topped off a dismal year for UK retailers, who have suffered their worst year on record.
According to the latest figures compiled by the British Retail Consortium in association with consultancy firm KPMG, retail sales for the year as a whole were 0.3% below 2019 levels — making 2020 the worst year in all the 25 years during which the BRC has tracked sales.
There is no doubt that not all retailers have been affected equally though. The BRC said that while food sales rose by 5.4%, physical non-food stores, including all non-essential retailers, saw sales drop by a quarter compared to 2019.
Growth in food sales rose 5.4% when compared to 2019, but non-food fell about 5%, the BRC has said. So overall, although sales growth did pick up a little from November’s near-stagnation, it remained well below the rate achieved in October.
Nearly half of all non-food purchases were made online, which does not bode well for the likes of Associated British Foods-owned Primark. It cannot but see a huge slump in sales, having steadfastly refused to jump on the online bandwagon.
At the beginning of December Primark estimated that the latest lockdowns were costing it £430 million in lost sales. Since then things can only have got worse, with Christmas trading failing to provide the bumper sales that they usually do - and now a third national lockdown in place for who knows how long. Primark’s pre-coronavirus sales were about £650 million a month.
A trading update due out tomorrow will give us more detail. Others though, like ASOS and Boohoo, which are also due to give trading updates this week, will have probably seen less of a drop - although we can expect to see a stark shift in buying patterns, with party outfits replaced by leisure wear.
Last week Marks & Spencer revealed that its clothing division has seen sales fall by nearly a quarter, as it gave its latest quarterly trading update. Sales of sleepwear though had soared, with 20% more women’s pyjamas sold during the 13 weeks to 26 December.
It has also, as a result of all this, been an increasingly worrying time for anyone working in the retail sector, outside of non-essentials. Last week a report from the Centre for Retail Research said 2020 was the worst year for job losses on the high street than any other in more than 25 years. Nearly 180,000 retail jobs were lost, an increase of almost a quarter on 2019’s already dismal job loss figures.
The shift towards online retail has no doubt been hastened by the pandemic. However, is there hope going forwards? Retail sales over a five-week period from late November to early January were 1.8% higher than a year earlier. The surge in online shopping cannot be dismissed and is here to stay. Marks & Spencer knows that. It has been snapping up beleaguered retailers, like Jaeger most recently, and intends to add them to its online collection.
While the traditional ‘in person’ department store model has clearly had its day, as we have seen with the demise of BHS, Allders and now Debenhams, the not totally dissimilar Amazon-style one-stop shop is proving to be a winner with consumers, and it’s one more retailers look set to opt for.
Spotting the winners in the retail sector is no mean feat and takes time. But what is evident is that the UK’s place in history as a nation of shopkeepers is being forced to take a shift to the virtual aisles.
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