As reported by the BBC and many other major outlets, according to ONS, UK retail sales increased for the fifth consecutive month in September, with sales rising 1.5%.
Although fuel sales were declining, growth was guided by average consumer spending on groceries, DIY products and garden products.
According to the latest statistics, retail sales were 5.5% higher than pre-pandemic levels in February, with the biggest jump in the three months to September, up 17.4% compared to the previous quarter.
The problem with this positive mindset is that retail sales have not actually experienced exponential growth, instead growth in September was lower than the previous month, with challenges to come, and growth has not been experienced by all-out retailers.
In fact, the new lockdown restrictions have the effect of double edges. This first half is a cut in customer numbers and potential closures of some shops. As Kingswood CIO said, Rupert Thompson:
“Retail sales achieved unexpectedly strong profits in September, with 1.5%m/m rising 4.7% from the previous year. However, this strength was prior to the introduction of new lockdown/social distance measurements. Business trust in October is the most vulnerable to the latest restrictions, with a decline led by the services sector. This fall underscored the need for a new package of support measures announced yesterday by the Prime Minister.”
The second consideration is a change in consumer behavior, focusing on outlets that are perceived as selling essential and reduced products as outlets that provide online retail opportunities. As Mark Lynch, partner at Oghma Partners, said:
“Though these figures highlight UK stoicism in supporting a vulnerable economy, it is important to note that these retail sales figures can be slightly misleading in that they give the impression of the strength of the consumer economy as a whole. UK shoppers have bought more food and drinks in supermarkets as they don’t spend eating out. Government lockdown restrictions re-emphasize previous trends we saw around the spring when they showed positive sales growth directly towards consumers and supermarket companies. We have already seen a major change in consumer behavior that has driven growth in the second quarter and is not to the third quarter, but again in the fourth quarter.”
“We are sadly seeing more and more long-term issues for food service providers who can’t serve their clients as they normally do. In reality, more end-user businesses will be destroyed, including the production capabilities of pubs, restaurants and more foodservice, and, to a lesser extent, food products to help us gain the ability to get the ability to be taken out of the market.”
