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Published on September 8th, 2020 | by The GC Team

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Retail sales rise but stores still struggling

Home-related products, including furniture and computing equipment, helped retail sales rise above the three-month average growth, but stores have a lot of lost ground to make up as shopping habits acquired during lockdown continue to drive online sales.   

According to data from the BRC and KPMG, total retail sales increased by 3.9% in August, above the three-month average growth of 3.5% and the best growth since May 2018, excluding Easter distortions, but sales remain down overall since the start of the pandemic.

Helen Dickinson, Chief Executive of the British Retail Consortium, said remote working has continued to help sales in home goods, such as food, computing, furniture and TVs, but acknowledged that lockdown appears to have permanently changed some consumers’ shopping habits, with online sales “continuing to boom” despite shops reopening in June.

“Meanwhile,” she added, “city centre retailers continue to be devastated by low footfall and poor sales, as office workers stayed away for yet another month.”

Over the three months to August, non-food retail sales increased by 1.4% on a total basis, but while online sales grew 44.2%, in-store sales of non-food items declined by 17.8%.

The non-food online penetration rate also increased, from 29.0% in August 2019 to 39.3%.

Paul Martin, UK Head of Retail at KPMG, said the vast majority of online categories realised significant growth in August.

“Clearly retailers have some serious thinking to do around what the future of the industry is going to be exactly,” he said. “While the overall online penetration rate has declined in recent months, the significant acceleration of the channel is here to stay.”

While Martin welcomed the rise in August retail sales, the coming months are far from problem free, he warned. Economic uncertainties – including the unwinding of the furlough scheme – are likely to leave many consumers thinking carefully about their spending priorities.

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