UK retail sales continued to recover in March, despite still being affected by the closure of non-essential stores, which suggests consumers were already preparing for post-lockdown life and releasing pent-up demand before the reopening of non-essential retail on 12 April.
According to The Office for National Statistics (ONS), retail sales rose 5.4% in March, smashing the 1.5% increase called for by consensus and continuing the partial recovery that started in February.
March’s forecast-beating month-on-month increase reflected ‘the effect of the easing of coronavirus (COVID-19) restrictions on consumer spending’, explained the ONS, adding that sales were 1.6% higher than February 2020 before the impact of the pandemic.
With a return to social life in sight, clothing saw the biggest rise in sales volumes last month with a 17.5% increase, as shoppers snapped up new outfits ahead of the easing of lockdown restrictions, althoughsales remained far below pre-pandemic levels.
Food stores reported monthly growth of 2.5% with strong growth in specialist stores such as butchers and bakers ‘likely reflecting the continued closure of the hospitality sector during the Easter period’.
ONLINE PROPORTION OFF FROM PEAKS
Interestingly, the proportion spent online decreased to 34.7% in March 2021, down from a record 36.2% in February 2021, but still well above the 23.1% reported in March 2020.
While the value of online spending did increase in March, spending in-store increased at a faster rate.
‘Still, the March 2021 share was up significantly from 23.1% in March 2020 and 20.0% in February 2020, and it is evident that the restrictions on non-essential retailers during the pandemic have given extra impetus to an already rising underlying trend for online sales’, explained Howard Archer, chief economic advisor to the EY ITEM Club.
SALES ‘SUBDUED OVERALL’
Though the March figures were strong, the ONS pointed out retail sales for the quarter have been ‘subdued overall’. In the three months to March 2021, retail sales volumes fell by 5.8% when compared with the previous three months, with strong declines in both clothing stores and other non-food stores as a result of tighter lockdown restrictions.
The good news is sales should see a considerable lift in April from the recent reopening of non-essential retail, as many consumers are sitting on significant savings and initial survey evidence on footfall and sales has been positive.
THE EXPERTS’ TAKE
Danni Hewson, AJ Bell financial analyst, said today’s retail figures ‘do show people are ready and willing to open their wallets, in fact sales in March this year were higher than those from February 2020.
‘The biggest impetus seems to be for people to ditch their zoom uniforms and change into something a little less comfortable. Clothing sales were up 17.5% in March as people readied themselves to socialise and garden centres reported above average sales for the time of year as people readied their gardens to provide a comfortable backdrop for that socialising.
‘What will cheer bricks and mortar retailers is the slight slow-down in online spending, sales fell 1.5% from February though they are still 23.1% higher than the same period last year.’
Ayush Ansal, chief investment officer at hedge fund Crimson Black Capital, commented: ‘For much of the past year, clothing has been an understandable drag on sales, as no nights out means there’s no need to buy new outfits and sitting on your sofa watching Netflix doesn’t result in wear and tear.
‘Though things are looking up for now, we shouldn’t forget that Government support packages are still keeping millions of people in jobs and when that support is withdrawn non-essential retail could suffer.
‘If unemployment starts to rise materially, the feel-good factor that is currently out there could evaporate very quickly.’
