MNI REALITY CHECK: UK Sales Higher On House & Garden Bonanza

UK retail sales likely topped expectations of a modest rise in March, with industry leaders reporting overwhelming demand for home and garden items during the month, ahead of the relaxation of some social restrictions towards month end.

City analysts forecast a modest 1.5% increase for last month after a 2.1% rise in February. However sales are forecast to top March 2020 outturns across the board, after the imposition of a national lockdown on 23 March last year.

Retailers could barely keep up with a surge in demand for home, garden and DIY items in March, according to retail managers, with one reporting a 50% increase in wholesale distribution to retailers last month.

GARDEN SALES

Gardening and homeware items "were up 800% at one point in March, coinciding with the announcement of the fact that we were opening up … clothing [sales] also increased in the final week of March," rising 172% over the same period of 2020, according to Andy Mulcahy, Strategy and Insight director at IMRG.

His comments were underlined by Andrew Goodacre, CEO at the Independent Retailers' Association, who said "hardware and DIY had a fantastic March … there is a continued hunger from customers to spend money on their homes and gardens."

Easter, which fell on the first weekend of April, may have boosted supermarket sales in March, with some industry insiders reporting greater-than-usual demand in holiday-themed food and merchandise. "People decided to treat Easter more like Christmas," said one.

"There are signs of people making a special, even symbolic, effort this year, and grandparents might be showing up with additional treats after 12 months of restrictions," said Fraser McKevitt of Kantar

Online clothing sales rebounded, although remain well below 2019 levels. Apparel sales over the internet rose by 172% in the final week of March over the same period of 2020, according to IMRG.

Paul Martin, the UK head of retail at KPMG said even after a year of social restrictions and lockdowns, the sector remains remarkably resilient, noting that "all hopes of a strong recovery now rest on consumers feeling more confident to move away form their homes and hitting the high street to browse the stores that have been out of bounds for months."

HEADWINDS

Even a strong March rebound is unlikely to prevent the retail sector from significantly dampening first quarter gross domestic product. In the absence of revisions, March sales must rise by 22% over February for the sector to maintain the level of the final quarter of 2020.

It is clear that the potential easing of restrictions due next month will not be a panacea for all retailers. "Expectations point to a fairly muted recovery especially when considering that base effects will tend to flatter annual growth next month, given the historic drop in sales in April 2020," acording to Ben Jones, the Principal Economist at the CBI.

Helen Dickenson, the CEO at the British Retail Consortium echoed Jones' comments. "Despite some product ranges trading well … the majority of categories remain in decline, and fashion and footwear remain the hardest hit. Meanwhile, with many stores still closed, online purchases reached the highest on record, particularly for TVs, gaming consoles and laptops," she said.

But industry leaders viewed the March data as a bit of ancient history after non-essential retailers reopened on 12 April. Despite pictures of queues forming outside shops, footfall was down 15% over the same week of 2019, according to some insiders. However, many retailers reported higher spending per customer when compared with two years ago.