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December retail sales dented by Omicron

While a 3.7% fall was the largest monthly fall since January 2021, volumes were still 2.6% higher than their pre-coronavirus February 2020 levels

Retail sales across the UK were dampened by the impact of Omicron last month, as volumes of sales fell by 3.7% in December 2021, according to the latest figures from the Office for National Statistics. 

While this was the largest monthly fall since January 2021, which saw a decline of 8.3%, volumes were still 2.6% higher than their pre-coronavirus February 2020 levels. 

Over the period, non-food stores sales volumes fell by 7.1%, with falls reported in each of its sub-sectors: department stores; clothing stores; other non-food stores and household stores.  

The ‘other non-food stores’ subsector, which includes retailers such as sports equipment, games and toy stores, reported a monthly fall in sales volumes of 8.9%, but were 6.7% above their February 2020 levels.

Clothing stores and department stores reported a fall of 8.0% and 6.3% over the month, and were 7.2% and 10.6% below levels in February 2020.   

The volume of household goods stores sales meanwhile fell by 3.2% in December, and were 1.4% below their levels in February 2020.

Despite “strong” sales reported in these categories in November, some retailers reported that the Omicron variant impacted retail footfall, causing this decline.

Elsewhere, food store sales volumes fell by 1.0% in December, though again, volumes were still 2.0% above pre-Covid levels in February 2020.

As consumers remained cautious of venturing out, the proportion of retail sales online rose slightly to 26.6% last month, up from 26.3% in November and “substantially” higher than the 19.7% recorded in February 2020, before the coronavirus pandemic.

Overall, the volume of retail sales between 2020 and 2021 rose by 5.1%, which is the strongest growth recorded since 2004, when it was also 5.1%. It was last higher in 2002 when yearly growth stood at 5.7%. 

However, the ONS said growth between 2020 and 2021 should be “interpreted with caution” given the restrictions on travel and non-essential retail which contributed to a fall in sales during 2020.

Silvia Rindone, EY UK&I Retail lead, said: “Retail sales volumes fell month-on-month in December but were still above their pre-pandemic levels – a good result considering the last-minute restrictions that were imposed and the impact on footfall from the emergence of the Omicron variant. 

“Based on current ‘excess savings’ data, we expect a bounce-back in spending activity as we emerge from the current wave. But the key question for the retail sector is: what will consumers spend their money on? Given the fact that consumers are still cautious, brands will be fighting for the same share of tightly-held wallets.”

Lisa Hooker, consumer markets leader at PwC, said: “With the arrival of the Omicron variant and work-from-home guidance, it was no surprise that headline retail sales fell on a month-on-month basis by 3%. 

“Much of this was to be expected, with Christmas shopping already brought forward by consumers wanting to make sure their presents arrived in good time after the disappointment and tier restrictions of last Christmas which had already boosted November’s sales.” 

She added: “As a result, many retailers had already banked their improved performance, as demonstrated by the trading updates and profit upgrades of the past few weeks. As lockdown savings continue to unwind and with consumer sentiment still above long-run averages, this gives the sector a sense of hope in the face of the cost-of-living headwinds that shoppers will inevitably face in the coming months.”

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