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Industry News August retail sales growth supports consumer optimism

Published on May 21st, 2021 | by The GC Team

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ONS retail sales figures for April show “sharp growth”

According to the Office for National Statistics (ONS) Monthly Business Survey for April 2021, retail sales volumes “grew sharply” in April 2021 with a monthly increase of 9.2%, reflecting the effect of the easing of coronavirus (COVID-19) restrictions including the re-opening of all non-essential retail from 12 April in England and Wales and from 26 April in Scotland.

Non-food stores provided the largest contribution to the monthly growth in April 2021 sales volumes, aided by strong increases of 69.4% and 25.3% in clothing stores and other non-food stores respectively.

Retail sales volumes were 42.4% higher than in April 2020, which was affected by the first national lockdown when the tightest restrictions were in place; however, these growth rates are distorted by “base effects” and, says the ONS, are not a reliable guide; sales volumes were 10.6% higher than February 2020, before the impact of the coronavirus pandemic.

All retail sectors reported a fall in their proportions of online sales as physical stores re-opened during the month; as a consequence, the total proportion of sales online decreased to 30.0% in April 2021, down from 34.7% in March 2021.

In the three months to April 2021, the volume of sales increased by 2.6% when compared with the previous three months, with strong growth in department stores and automotive fuel retailers of 9.9% and 8.9% respectively.

Longer-term comparisons show the continuing impact of the pandemic. Non-store retailing (retailers with no physical store presence) was the sector to report the largest growth of 56.0% when compared with April 2019, highlighting a change in consumer behaviour caused by retail restrictions during the pandemic.

Comment from John Federman, CEO at experiential relationship management firm JRNI, on these latest figures, pointed out that: “What is clear from the ONS findings is that the public is still keen to get out there.  After months at home, customers want human connection more than ever and shopping provides that.  Whether consumers shop in-person or online, the expectation for true, personalised services is likely to increase.  Retailers will need to ensure their physical and virtual offerings incorporate more individual service opportunities for consumers, as the lines between the online and in-store experience become increasingly blurred. 

“Having the right technology in place provides a major advantage over competitors in the current environment. Managing experiences isn’t just a matter of telling employees to do it – staff need to be armed with the tools they need to do the job right.  Those retailers that can book personalised appointments, provide virtual queuing slots and offer kerbside click and collect are the ones that will attract customers.

“In the age of social media, targeted ads and more, consumers are at a point where they expect retailers to know what they want. And when retailers can give their customers what they want, they will see the difference.”

Bjorn Timelin, senior partner at McKinsey & Company, added: “This steady increase in sales is a shot in the arm for retail. The duo of the vaccination programme and the easing of restrictions has shifted some traffic back to stores. Our UK consumer sentiment analysis showed that most UK consumers said they were waiting for the lifting of restrictions and wider vaccination coverage before reengaging with out-of-home activities.

“Despite the increase in in-store sales in April, the omni-channel shift is here to stay. Our analysis shows that 92% of consumers planned to continue purchasing online once the pandemic is over.  Balancing on and offline retail strategies will define sales trajectories, and act as a marker for economic recovery.”

Home delivery company ParcelHero contends that the figures show “in-store sales dealt e-commerce a body blow.” In contrast to the strong growth in physical store activity, “online sales were left reeling, falling back by -5.6% compared to March. These figures show that it is physical store sales that are now leading retail’s recovery. However, that doesn’t mean online sales are out for the count.”

ParcelHero’s Head of Consumer Research, David Jinks M.I.L.T., says: ‘At last, High Street retailers have some news to celebrate. In-store shopping certainly won on points in April. All this is hugely encouraging and shows consumers still want to visit physical stores if they can feel safe. There’s no doubt that the success of Britain’s vaccination campaign has done a lot to increase public confidence. However, any retailer relying solely on increased High Street footfall must realise it’s impossible to ever land a knock-out blow to online shopping. Successful stores must embrace e-commerce as a key part of an integrated sales strategy. Online sales are still an enormous 31.9% higher than they were a year ago in April 2020, when Brits first began the great switch to online.”

ParcelHero’s own independent research shows 46% of consumers “have no intention of spending as much in stores as they used to do pre-pandemic.”

“Ultimately,” concludes Jinks, “the fight between online and in-store sales must end in a draw. An omnichannel sales strategy, embracing both shop and online sales, with both services complementing the other, is the only way forward as retail claws its way back from the clutches of the coronavirus.”

Emphasising the continued underlying rise in online shopping, and the need for retailers to exploit the synergy between physical and online sales, Ulas Akincilar, Head of Trading at the online trading provider INFINOX, said: “The first thing to say is that the obituaries written about the high street now look a little premature. Britons seized the opportunity to shop in physical stores once again, and the proportion of sales made online fell across the board in April.

“Nevertheless at 30% of all sales, online remains a huge force and well above its pre-pandemic level. That genie is well and truly out of the bottle, and online shopping habits are here to stay.

“The big question now is how well this boom will sustain, and how much of it is the fleeting exuberance of a country enjoying the first significant easing of lockdown restrictions.

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