Economy

Retail sales growth slows in July

Nonetheless, sales were still up by 5.2% in the three months to July against the previous three months

Retail sales volumes fell by 2.5% between June and July 2021, as rainy weather and last month’s ‘pingdemic’ dampened demand from consumers.  

Nonetheless, sales were still up by 5.2% in the three months to July against the previous three months, and 5.8% higher than their pre-pandemic February 2020 levels, according to new data from the ONS.

Non-food stores as a whole reported a fall of 4.4% in monthly sales volumes during the month, with falls reported in each of its sub-sectors. Despite this, sales volumes were still 5.9% higher than the same period last year and 0.4% above their pre-coronavirus pandemic levels.

Within this sector, clothing stores and household goods stores both reported monthly declines of 2%, while department stores were the only sector to show an increase over the period at 0.2%.

Meanwhile, food store sales volumes fell by 1.5% in July 2021, following an increase of 3.9% in the previous month when sales were boosted by the start of the Euro 2020 football championship. Despite the monthly decline, food store sales volumes were still 4.9% above their pre-pandemic levels however. 

The proportion of retail sales online increased to 27.9% in July from 27.1% in June and remained “substantially higher” than the proportion of online retail spending in February 2020 of 19.8%.

Online spending values increased in July 2021 by 0.3% when compared with June 2021, largely driven by department stores (13.1%) and food stores (4.5%).

This resulted in a slight increase in the proportion of online retail spending values, which increased to 27.9% in July 2021, from 27.1% in June. This remains higher than the proportion of online retail spending in February 2020 (pre-coronavirus pandemic) of 19.8%.

Commenting on the latest data, Jacqui Baker, partner and head of retail at RSM, said: “Despite a surge of shoppers hitting the high street on Freedom Day, footfall was down in July with the ‘pingdemic’ hampering retail sales – keeping consumers at home and leaving some retailers too short-staffed to open the doors. 

“Throw in some unseasonal weather and uncertainty around a fourth coronavirus wave as new cases hit the highest level since January 2021; and it’s no surprise that consumer confidence was knocked.”

She added: “August is normally a slow month due to holidays, but this year retailers will be hoping that the thriving staycation market and changes to self-isolation rules for the double jabbed will drive an unseasonal peak in sales to aid the post-pandemic recovery.”

Lisa Hooker, consumer markets leader at PwC, said: “While the headline rate of growth slowed in July compared with June, retail sales were still comfortably ahead of both last year and pre-pandemic levels.

“So, although July saw slightly lower footfall on high streets and Team GB’s Olympic success did not have the same effect on spending as the Euros the previous month, consumers continued to be encouraged by record sentiment levels and were keen to spend their lockdown savings, despite the slight unwinding of pent-up demand that has fuelled retail sales over the last three months.”

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