Shoppers continued to shop online in July despite stores reopening

Last month, shoppers continued to shop online, with e-commerce surging at a pace that slowed only slightly as shops reopened. However, the figures suggest while online sales took off, in-store non-food sales were down by more than a quarter compared to last year. According to the latest BRC-KPMG Retail Sales Monitor, the overall retail sales grew by 3.2% in total, compared to July 2019.

A slowing in the pace of growth

42% of non-food retail sales took place online in July, while online non-food sales grew by 41%, compared to July 2019. This represents a slowing in the pace of growth, as non-food e-commerce grew by an average of 49.7% a month in the last three months. However, online growth is still well ahead of the twelve month average of 19.9%.

July was the second month in a row in which retail sales grew compared to last year since the start of the COVID-19 outbreak, with sales both above the average for the last three months (+0.4%), and the last twelve months (-1.9%) – and above the 0.5% increase seen last July.

Shops are still struggling to survive

Helen Dickinson, Chief Executive of the British Retail Consortium (BRC), said: “Many shops continued to struggle as footfall was dow, with many people still reluctant to go out and fewer impulse purchases. The strongest performance are from food, furniture and homeware as consumers increasing invest in their time at home, however many shops, particularly in fashion, jewellery and beauty, are still struggling to survive. Online sales remained buoyant, slowing only slightly despite more shops reopening.”

Overall, non-food retail sales grew with 7.9% on a like-for-like basis in the three months to July. In addition, it fell with 4.3% in total, ahead of the twelve month average decline of 6.1%. In July alone, non-food retail sales were in growth.

Helen Dickinson added: “While the rise in retail sales is a step in the right direction, the industry is still trying to catch up lost ground, with most shops having suffered months of closures. The fragile economic situation continues to bear down on consumer confidence, with some retailers hanging by only a thread in the face of rising costs and lower sales. Rents are also continuing to accumulate and the next Quarter Rent Day could see many otherwise viable businesses fall into insolvency, costing stores, jobs and economic growth. The Government should adopt the proposal from landlords and tenants for a Property Bounceback Grant, which would deliver £7 billion in tax revenue to the Exchequer and save 375,000 jobs.”

September will be the real test

Paul Martin, UK Head of Retail at KPMG, said: “The release of pent-up demand continued in July, with total retail sales growing at 3.2% compared to the same month in 2019. Fortunes were heavily polarized though, and fashion sales continued to suffer despite the summer weather - even online.”

He added: “September will be the real test for retailers this quarter, traditionally being a month of high volumes driven by the return to school after the holiday season. That aid, with the furlough scheme unwinding and wider economic uncertainty set for the autumn, consumer anxiety will likely rise along with it. This will place more scrutiny on disposable income and make life even tougher for retailers.”