Impact of Covid lockdowns and shifting spending habits result in 0.3% drop from 2019 level
Richard Partington Economics correspondent
@RJPartington
Tue 12 Jan 2021 00.01 GMT
Consumers largely stayed away from the high street, with non-food items in physical shops falling by 24%. Photograph: Matthew Horwood/Getty Images
UK retail sales suffered the biggest decline in 25 years last year as the closure of non-essential shops during lockdowns more than outweighed the online spending boom fuelled by Covid-19.
The British Retail Consortium (BRC) said total sales fell by 0.3% last year from the level in 2019 – the worst performance since records began in 1995 – reflecting the impact of government lockdowns and shifting consumer spending trends.
Rishi Sunak warns UK economy will get worse before it gets better
However, the overall drop in spending masks an explosion in sales for some shops, and a dramatic collapse for others. Amid a decline in spending in pubs, restaurants and hotels during the crisis, sales of food bought from shops increased by 5.4% on the year. However, sales of all other products fell 5% from a year earlier.
While online sales were boosted during lockdown as consumers largely stayed away from the high street, sales of non-food items in physical shops collapsed by 24%.
The decline in sales volumes comes after the first annual fall since 1995 in 2019, when years of weak wage growth hurting households’ finances and Brexit fears led to a 0.1% drop in retail sales compared with 2018 levels
Helen Dickinson, chief executive of the BRC, said Christmas had offered little respite for retailers, as many shops were forced to shut during the peak trading period. Calling on the government to provide fresh financial support for the sector, she said: “With shops still closed for the foreseeable future, costing stores billions in lost sales, many retailers are struggling to survive.”
Despite the sharp drop in non-food sales, the latest figures from the BRC showed that total retail sales rose by 1.8% in December compared with the same month a year ago. It said there was a rise in the purchase of food-based gifts at Christmas, as many shoppers bought what they could from shops that remained open. The volume of food and drink sales was the highest for festive spending on record.
Separate figures from Barclaycard – Britain’s biggest credit card provider – showed that consumer spending fell by 2.3% in December as tougher government controls hampered the high street and hospitality sectors in the pivotal Christmas period.
It said online retail increased by 52.2% in December as Britons shopped from home, while tighter restrictions led to in-store retail declining 8.3%. Barclaycard records almost half of UK transactions, and differs from the BRC figures because it monitors spending in shops, online and elsewhere across the economy – such as in pubs, restaurants and hotels.
With few opportunities to socialise before Christmas, sales in pubs and bars fell by more than 70%, while spending in restaurants plunged 65%. Physical retailers – such as department stores and clothes shops – also recorded declines of 15% and 7% respectively.Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk
Raheel Ahmed, head of consumer products at Barclaycard, said: “With the latest government guidance to stay at home and a vaccine rollout on the horizon, we are all hopeful of a brighter and more prosperous year ahead.
“Yet, for now, the reality of lockdown life remains and it’s once more a hugely challenging time for high-street retailers as well as the hospitality, leisure and travel industries.”
UK retail sales suffered the biggest decline in 25 years last year as the closure of non-essential shops during lockdowns more than outweighed the online spending boom fuelled by Covid-19.
The British Retail Consortium (BRC) said total sales fell by 0.3% last year from the level in 2019 – the worst performance since records began in 1995 – reflecting the impact of government lockdowns and shifting consumer spending trends.
Rishi Sunak warns UK economy will get worse before it gets better
However, the overall drop in spending masks an explosion in sales for some shops, and a dramatic collapse for others. Amid a decline in spending in pubs, restaurants and hotels during the crisis, sales of food bought from shops increased by 5.4% on the year. However, sales of all other products fell 5% from a year earlier.
While online sales were boosted during lockdown as consumers largely stayed away from the high street, sales of non-food items in physical shops collapsed by 24%.
The decline in sales volumes comes after the first annual fall since 1995 in 2019, when years of weak wage growth hurting households’ finances and Brexit fears led to a 0.1% drop in retail sales compared with 2018 levels
Helen Dickinson, chief executive of the BRC, said Christmas had offered little respite for retailers, as many shops were forced to shut during the peak trading period. Calling on the government to provide fresh financial support for the sector, she said: “With shops still closed for the foreseeable future, costing stores billions in lost sales, many retailers are struggling to survive.”
Despite the sharp drop in non-food sales, the latest figures from the BRC showed that total retail sales rose by 1.8% in December compared with the same month a year ago. It said there was a rise in the purchase of food-based gifts at Christmas, as many shoppers bought what they could from shops that remained open. The volume of food and drink sales was the highest for festive spending on record.
Separate figures from Barclaycard – Britain’s biggest credit card provider – showed that consumer spending fell by 2.3% in December as tougher government controls hampered the high street and hospitality sectors in the pivotal Christmas period.
It said online retail increased by 52.2% in December as Britons shopped from home, while tighter restrictions led to in-store retail declining 8.3%. Barclaycard records almost half of UK transactions, and differs from the BRC figures because it monitors spending in shops, online and elsewhere across the economy – such as in pubs, restaurants and hotels.
With few opportunities to socialise before Christmas, sales in pubs and bars fell by more than 70%, while spending in restaurants plunged 65%. Physical retailers – such as department stores and clothes shops – also recorded declines of 15% and 7% respectively.Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk
Raheel Ahmed, head of consumer products at Barclaycard, said: “With the latest government guidance to stay at home and a vaccine rollout on the horizon, we are all hopeful of a brighter and more prosperous year ahead.
“Yet, for now, the reality of lockdown life remains and it’s once more a hugely challenging time for high-street retailers as well as the hospitality, leisure and travel industries.”
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