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Retail results March 2020: The industry comments

In March 2020, the monthly retail sales volume fell sharply by 5.1%; the largest fall since the series began as many stores ceased trading from 23 March following official government guidance during the coronavirus (COVID-19) pandemic.

The ONS figures showed:

  • In March 2020, the monthly retail sales volume fell sharply by 5.1%; the largest fall since the series began as many stores ceased trading from 23 March following official government guidance during the coronavirus (COVID-19) pandemic.
  • In March 2020, clothing store sales saw a sharp fall when compared with the previous month, at negative 34.8%.
  • Food stores and non-store retailing were the only sectors to show growth in the monthly volume series in March 2020, with food stores seeing the strongest growth on record, at 10.4%.
  • In the three months to March 2020, retail sales volume fell by 1.6% when compared with the previous three months, with strong declines in non-food stores and fuel.
  • Online sales as a proportion of all retailing reached a record high of 22.3% in March 2020 as consumers switched to online purchasing following the pandemic.

Dr. Kerstin Braun, President of Stenn Group, a global trade finance provider, comments:

"Retail shops were already suffering before the coronavirus as a result of changing consumer behaviour. Increasing numbers of people are turning away from the high street and shopping online, which offers greater convenience and ease. The Covid-19 pandemic has only escalated the decline of the high street and is likely to speed up these inevitable shifts, with high street footfall seeing its steepest decreases ever.
 
"Due to restrictions and reduced incomes people will be buying less, and further administration filings are inevitable. SMEs, which make up 35% of retail sales, will be hit the hardest and we know that recovery will not be easy. Lenders have been traditionally reluctant to provide loans to shops however rent support programmes, similar to those for furloughed staff, could help to stem the damage and control the effects.

"Fortunately, we will soon see a slow reopening and some return to normality. This will undoubtedly come with new social distancing behaviours that we have already been practising and feel like second nature to us now. Life may not go back to as it was before but even this will be a welcome change." 

Commenting on the latest ONS retail sales figures for March and GfK’s consumer confidence figures for April, Paul Martin, UK head of retail at KPMG, said: 

“The impact of COVID-19 on the retail industry is ringing painfully clear in the latest ONS retail sales figures, and indeed in the latest consumer confidence survey by GfK. The unprecedented situation and the nation’s subsequent lockdown has unsurprisingly seen sales plummet rapidly by historic rates, whilst consumer confidence is teetering above the historic lows recorded during the most recent financial crisis. It’s important to remember that March retail sales figures only capture a small proportion of the lock down – coming in place on March 23rd - but what is clear is that sales of non-essentials had evaporated well before the restrictions came into place, as anxiety about the virus started to build.   

“Grocers and online retailers may appear beneficiaries with our high streets currently void of all footfall, but the surges here aren’t likely to be enough to make up for the lost ground across the sector more broadly. Added to that, a surge in sales hasn’t necessarily meant a rise in profits, with added costs associated with meeting demand in this climate. If considering the non-essential sales missed due to lock-down, it’s likely these will be lost forever and in many cases retailers will be frantically writing off stock. Only those deemed ‘essential’ currently, or those with robust online operations, are able to adapt to this current climate. Those that can’t, are naturally fixated on when the restrictions will lift.  

“If confidence deteriorates further, it’s likely retail spend will be far from anyone’s mind when things do return to the ‘new normal’. There is little question that the retail landscape has changed permanently, but the key question will be: which retailers will still be fit for purpose in the next chapter?”
 

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