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UK retail sales stagnated in May, as a 9% rise in April following the re-opening of non-essential shops may have exhausted pent-up demand for frustrated shoppers, industry figures told MNI.
City analysts forecast a 1.5% increase in May -- taking sales 29.3% above year-ago levels -- but reports from retailing leaders suggest that official sales might fall short of expectations.
Insiders had hoped that the resumption of indoor eating and drinking on 17 May would draw consumers to the high street, but town and city footfall remained significantly below 2019 levels, according to retailers. The reopening of hospitality may have had an adverse effect on retailers, giving consumers a wider range of options on which to target their discretionary spending.
"There has definitely been a migration" of discretionary spending. "People are doing other stuff, because they can … however, clothing sales have held up pretty well" despite rainy weather across the country in May, said Andy Mulcahy, Strategy and Insight director at IMRG.
'When hospitality opened up in May, we expected to see an increase in city centre footfall, but it didn't happen. Footfall on the high street is down approximately 25% from 2019," Andrew Goodacre, head of the Independent Retailers Association said.
Poor May weather may have dampened demand for clothing and footwear, which surged by 69.4% in April, potentially exhausting pent-up demand. Uncertainty over the summer holiday season and the resumption of big events, such as weddings and festivals, may have also adversely affected the desire to add to wardrobes.
Don Williams, a senior retail partner at KPMG, said the wet weather in May failed to dampen consumer demand, and shoppers continued to return to the highs street. "Clothing retailers were the biggest beneficiaries of pent-up demand, clocking up increases of over 100%, as an easing of restrictions saw stores reopen and social events slowly come back on the agenda," he said
SUPERMARKET SALES SLOW
Supermarket sales weakened, as a fuller reopening of pubs and restaurants provided greater opportunity to take meals away from home, according to Susan Barrat, CEO at IGD. Barrat noted a number of pluses for food and drink sales, including a late Bank Holiday and sporting events, but "throughout the month faced persistently high comparatives with 2020."
Fraser McKevitt at Kantar also pointed to the slower supermarket sales as people return to more normal habits now lockdowns are easing. "We can see that reflected in grocery sales … we're seeing take-home grocery sales dip versus 2020 as people are able to eat in restaurants, pubs and cafes and can pick up food on the go again," he said.
Online sales declined for the second straight month, falling short of the historical pattern of little change between April and May. Annual sales plunged by a record 9.1%, according to the IMRG internet retailing association, although 2020 provided a challenging comparative, as sales surge by close to 60% last year.
The overall disappointment in the month was perhaps best summed up by Ben Jones, the principle economist at the CBI, who said sales were in line with seasonal norms, but overall that was "perhaps a touch disappointing after April's stronger results."
"Some retailers have suggested the increase in demand after the strong reopening of non-essential retail in early April was either short lived or less strong than expected," he said.