MNI REALITY CHECK: UK Sales Plunged In January Lockdown

Retail sales fell sharply in January with most non-essential shops shuttered and could record an even steeper decline than the 3.0% fall forecast by City analysts, industry insiders told MNI.

Sales plunged by 4.1% in November, the previous month of national lockdown despite reports then of brisk pre-Christmas trading in the first five days of the month. That suggests an even larger fall in January, albeit from a fairly low base in December, when many non-essential shops ceased trading on or around the 20th.

Food sales may prove to be a rare ray of light in January retail sales, with restaurant and school closures lifting sales of food to be consumed at home. The average family spent GBP50 more on groceries than in January 2020, according to Kantar. Dry January may be yet another tradition laid to waste by Covid, with retailers reporting a surge in alcohol sales last month.

"Many sought to indulge and keep spirits higher during a tough winter month and alcohol sales grew overall by GPB234 billion, an uplift of 29% on last year … We expect to see strong growth for all the grocers fall off as we reach the anniversary of the first national lockdown in March," Kantar's Fraser McKevitt said.

Some were a little more cautious, though. "The latest national lockdown triggered a small spike in (grocery) sales at the start of the month, but this was much more modest than the surge experienced in the first lockdown in March," according to Susan Barrat, CEO at IGD.

NON-ESSSENTIAL SLUMP

Sales at non-essential retailers was down by approximately 75% as stores went into lockdown from early in the month. Helen Dickenson, chief executive at the British Retail Consortium said January saw retail sales growth decline to its lowest level since May of last year.

"The current lockdown has hit non-essential retailers harder than in November, with the new variant hampering consumer confidence and leading customers to hold back on spending — especially on clothing and footwear," she added.

ONLINE SALES

Internet transactions likely prevented an even steeper retail decline, helped by sales of technological and communications equipment soared, with children forced back into home learning in the first month of the year.

Online sales soared by an annual rate of 78% in January, far exceeding the spectacular gains of last spring, according to IMRG. Internet transactions declined by just 22% in value terms between December and January, much better than the historical decline of approximately 35%.

"Demand is absolutely singing online … Shops may not be selling things they expected to sell, but they're selling what they can. They've had to diversity that way," said Andy Mulcahy, strategy and insight director at IMRG.

Overall retail sales are expected to fall 3.0% month-on-month, although standing higher y 2.9% year-on-year. Ex-fuel, sales likely fell 2.1% m/m and rose 2.7% y/y.