Retailers face second worst month on record

May was another “testing” month for retailers, with total sales down by 5.9%, according to the latest BRC-KPMG retail sales monitor. 

The decline was less drastic when compared to April’s fall of 19.1%, but still marked the second worst decline recorded since the monitor began in 1995.

Throughout the month, retail sales increased 7.9% on a like-for-like basis against the year prior, when they had decreased 2.2% from the preceding year. 

However, the latest retail sales monitor excluded temporarily closed stores but included online sales, with the above figure primarily driven by online sales.

Over the three months to May, in-store sales of non-food items fell by 50.3% on a total basis, and 21.9% on a like-for-like basis. In the same period, food sales increased 5.6% on a total basis and 8.7% on a like-for-like basis

In total, non-food retail sales decreased by 2.1% on a like-for-like basis and 21.8% on a total basis, though online non-food sales increased by 60.2% in May, against a growth of 4.4% the year prior.

Paul Martin, UK head of retail at KPMG, said: “The disparity between different types of retailers and categories continues, with clear divides between essential and online versus non-essential and physical.

“As restrictions ease, retailers have much to consider during the pandemic’s recovery-phase. Stores may soon have the greenlight to re-open but it will be a gradual affair with safety front of mind, and some doors may not reopen at all.”

He added: “Covid-19 has acted as an accelerant in the shift towards having less of a physical presence, not least due to the obvious need to radically reduce costs for survival. 

“We’re also witnessing historically high levels of sales transacted online – currently over 60% – and while this will ease as more stores open, consumers have formed new habits that will see the online channel continue to be more prominent going forward.” 

Helen Dickinson OBE, CEO of the British Retail Consortium said: “Sales in May demonstrated yet another month of struggle for retailers across the country, despite an improvement on the previous month. 

“While the month showed record growth in online sales, many retailers will be anxious to see whether demand returns to our high streets when non-essential shops reopen from 15 June.”

She added: “Weak consumer confidence and social distancing rules are likely to hold back sales. Furthermore, there are concerns that if Government support is withdrawn too quickly, shops and businesses will not survive. 

“Until the situation improves, retailers urgently need support on rents and negotiations with their landlords as high fees could force some physical retailers to shut for good.”

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