From a boutique owner and accountant
Jacqui Baker, RSM’s Retail Director comments on the latest OMS retail sales results:
The latest ONS retail sales release brings news of performance across the month of December but also for 2020 overall. Quantity of sales in 2020 declined by 1.9 per cent compared with 2019. Volume of food sales saw growth at 4.4 per cent, in-store clothing sales declined 25.1 per cent and department stores declined by 5.2 per cent for the year. Non-store retailing saw a record increase of 32 per cent in volume of sales and total online retailing values increased by 46.1 per cent the largest increase in eCommerce sales since 2008.
Britain’s December retail sales increased in volume by 2.9 per cent compared with 2019 with the big winners being food retailers who saw an increase of 4.4 per cent. Clothing stores saw an increase in November of 21.5 per cent but year on year lag behind at a decline of 14.2 per cent on the year.
December’s ONS retail sales results end one of the worst years on record for retail. As an independent boutique owner and with clients across the sector, I can empathise with any management team now mustering the energy to begin 2021 on a positive foot. A decline of a quarter for non-food, in-store sales in 2020 brings challenges to the sector that will continue to make their mark in 2021. Grants, access to loans and employment support are all admirable initiatives by Government, but bricks and mortar-based stores must begin to trade, and soon, before we see more unemployment and greater insolvencies across the sector.
‘Solid sales growth in December is heartening news for the sector but the divide between food and non-food categories remains the same. Christmas saw mixing of households curtailed for most of the country and cancelled altogether for London and the South-East. This left many scrabbling to buy the Christmas turkey and all the trimmings with 5 days’ notice, no doubt bringing a last-minute boost to food retailers in an already strong month. Despite headlines of some online fashion retailers seeing strong growth in December, the story for the wider fashion industry, remains on a cliff on edge and will do so until the opening of society returns.
‘The start of 2021 has bought with it more disruption for the retail sector with Brexit delaying supply chains. But there are positive signs on the horizon. With the vaccine roll-out proceeding at pace and the Bank of England reporting UK household savings exceeding £100bn, the prospect of a rebound come Easter feels likely. RSM’s Financial Conditions Index backs this notion. Our expectations are for improved economic activity during the second half of the year and a sustained increase in consumer spending near to 6 per cent.
(RSM’s Financial Conditions Index is an aggregated performance indicator of currency, bond and equity markets).