MNI REALITY CHECK: UK Dec Sales May See Lockdown Lift Boost

Retail sales are set to rise sharply in December, bouncing back after the closure of non-essential stores through most of November sank non-food sales, industry leaders told MNI.

Non-essential shops were open for business for at least three weeks through much of the UK, before succumbing to Covid-restrictions in the days before Christmas, providing an easy comparative for month-on-month sales. Supermarkets reported very strong growth, as pre-Christmas shopping shifted from gift and clothing retailers to food stores, which remained open as non-essential retailers as shops shuttered in the run-up to Christmas day.

In the absence of revisions to October and November data, sales need rise by just 0.9% in December to leave fourth quarter retailing on level pegging with the previous three months. That suggests that retail sales could make a positive contribution to fourth quarter GDP.

Growth in internet sales may have slowed — or even declined on a monthly basis -- in December, with Black Friday discounting pulling Christmas shopping forward to November. Retailers are bracing for a difficult January, with Brexit-related friction holding up imports into the UK. Many importers have reported challenges in complying with new rules-of-origin regulations, which could exacerbate an already-depressed start to the year.

"While celebrations may have been more low key, there were also signs of consumers keeping merry and indulging after a tough year … driving record monthly sales of GBP584 billion, GBP74 million more than last December," Fraser McKevitt from Kantar told MNI.

His comments were backed up by Paul Martin, UK head of retailing at KPMG, who said "household related and food item purchases were top of the Christmas shopping lists with historic growth rates in contrast to fashion, accessories and beauty products which experienced double-digit declines."

"December 2020 saw the highest ever festive spending in the UK food and grocery sector … tightening restrictions across much of the country limited other sales channels and enabled supermarkets to get the full benefit of people celebrating with food and drink," said Susan Barrat at IGD, underlining the bonhomie enjoyed by supermarkets.

NON-ESSENTIAL STALLS

Not all parts of the sector in the run up to Christmas, with many small independent traders unable to open.

"Christmas offered little respite for [physical non-food stores], as many shops were forced to shut during the peak trading period. Though this led to a rise in food-based gifts as many shoppers bought what they could from the shops that were still open," Helen Dickenson, head of the British Retail Consurtium said.

Andrew Goodacre, CEO at the Independent Retailers' Association underlined the differing conditions for certain sectors.

"If you've been classed as essential, you've done well. Footfall hasn't dropped as much as during the first lockdown … Overall spending hasn't changed, but people are spending differently," he said.

"It says something about the challenges the retail sector has faced during 2020 that stable sales volumes in the run-up to Christmas were seen as a good result for the time of the year … The news year looks set for an unpromising start," CBI principle economist Ben Jones said, emphasizing what a 'good Christmas' now meant for many retailers.