Online sales have fallen to levels not seen since the crisis began, but shoppers started shopping for Christmas early in this year’s fashion stores.
According to the Office for National Statistics, overall sales volume increased by 0.8% in October due to the rush to organize presents quickly. This ended a 5-month period of flat or falling volumes.
This figure was higher than the figure from Reuters’ poll of economists, which suggested a 0.5% month-on-month rise. The August and September sales declines of 0.2% each were revised to 0 percent.
Experts believe that early Christmas shopping was driven by concerns over item availability, and the desire to not miss the holiday season. Consumers still prefer to shop in-store for 7 out 10 purchases.
Analysts also stated that there are signs Christmas is coming early to retailers, with shoppers not waiting for Halloween before heading into stores. This raises concerns about the availability of toys and gifts this year.
Non-food retailers were the sole main sector that saw a surge in sales in the month of September according to ONS statisticians. There was also a significant increase in non-food shops’ revenues, as well as charity shops and auction houses.
The sales volume of clothes stores rose 6.2%, as retailers suggested early Christmas trading had helped sales. Some customers were keen not to miss out on the opportunity to take advantage of supply chain shortfalls in their industry. According to the ONS, this means that clothes shops are only 0.5% below their pre-pandemic level of February 2020.
After September’s panic buying, fuel sales declined sharply in October by 6.4%. The volume of food sales fell by 0.3%, but is still above the pre-pandemic level by 3.4%.
The proportion of online sales that accounted for 27.3 percent of total sales in October fell significantly. The online sales percentage was now at the lowest point since March 2020, but it is still well above that of 19.7 percent in February 2020.
Grant Fitzner is ONS’s chief economist. He stated today that after five months of stagnant growth, retail sales saw a pickup in October. Sales are up slightly, but still below pre-pandemic levels.
According to the Office for National Statistics, retail sales increased by 0.8% in October 2021, compared to September 2021. These figures are 5.8% higher than the pre-pandemic level in February 2020.
“Clothing and department store sales saw a rise this month. Clothing stores reached their highest levels since the outbreak. Some retailers suggest that Christmas shopping early helped boost trade.
“Fuel sales dropped sharply in September, after returning to their normal levels following the September increase. Despite falling sales of food and online, they are still above levels pre-pandemic.
British Retail Consortium chief says sales will help retailers.
Helen Dickinson, British Retail Consortium chief executive
Helen Dickinson is the chief executive officer of British Retail Consortium
“Retailers can expect to feel relief from the increase in sales when they reach the end of the Christmas shopping season.
The UK’s ‘footfall is growing at a faster rate than other major EU countries, which is clearly translating into increased consumer spending. As retailers boost their delivery and click&collect, online sales continue to rise well beyond pre-pandemic levels.
“Increased sales of clothing and shoes, even formalwear, were a result of social calendars filling up, which led to a rise in confidence about the possibility that people would go out. With Halloween severely affected by last year’s pandemic, October saw chocolates and children’s costumes sell well as families make the most of it.
While retailers make a huge effort to get essential foods and presents ready in time for Christmas, the supply chain challenges continue to plague them.
‘Labour shortages throughout the supply chains – from farms to distribution – are pushing up costs and creating some gaps on the shelves. However, Christmas is a priority for retailers. Many have set aside time in advance to make sure everyone has enough time to purchase decorations and gifts before the big day.
“Retailers hope that demand will continue through the golden quarter. But, there remain challenges, including higher prices and rising bills for households.
Analysing the figures, Helen Dickinson, chief executive of the British Retail Consortium, said: ‘Retailers will be relieved by the improvement in sales as they enter the final straight in the run up to Christmas.
The UK’s ‘footfall is growing at a faster rate than other major EU countries, which is clearly translating into increased consumer spending. As retailers boost their delivery and click&collect, online sales continue to rise well beyond pre-pandemic levels.
“There was a significant increase in sales of formalwear and clothing, and also footwear, because people were more confident going out. With Halloween severely affected by last year’s pandemic, October saw chocolates and children’s costumes sell well as families make the most of it.
While retailers make a huge effort to get essential foods and presents ready in time for Christmas, the supply chain challenges continue to plague them.
‘Labour shortages throughout the supply chains – from farms to distribution – are pushing up costs and creating some gaps on the shelves. However, Christmas is a priority for retailers. Many have set aside time in advance to make sure everyone has enough time to purchase decorations and gifts before the big day.
Retailers feel optimistic that there will be continued demand through the gold quarter. But, it is clear that many challenges still remain with high prices and rising bills for households.
Hargreaves-Lansdown’s Susannah Streeter is a senior investment and market analyst. She said: “Christmas has arrived early for retailers. There are many signs that shoppers have not waited until Halloween to hit stores. This was despite warnings from Hargreaves Lansdown that there could be a shortage of toys and presents this year.
“The data suggests that the pinch on income is already felt by shoppers looking to find bargains at charity shops or on auction websites. The bulk of the 7.2% increase in non-food store volumes was due to sales volumes at second hand goods shops.
“There was an increase in clothing sales which rose 6.2% over the past month. Because people have waited so long to party, it is not surprising that customers are ready to pay more and get the latest fashions.
‘Other ONS data shows that more staff have headed back to the office now – with half of businesses saying their workforces had returned to their normal place of work up from a third in early September.
“Plenty” of employees want to be the best when meeting new colleagues. Renovating work clothes seems to have driven sales.
Comparing September 2021 to October 2021 the volume of automobile fuel sales dropped by 6.4%. It is 5.1% lower than their February 2020 levels.
Lisa Hooker, consumer markets leader at PricewaterhouseCoopers, said: ‘Retailers will be breathing a sigh of relief as retail sales inched up in October on almost every measure.
‘Christmas has come early for retailers’, says markets anaylst
Susannah Streeter, Hargreaves-Lansdown market analyst
Susannah Streeter is a senior analyst in investment and markets at Hargreaves Lansdown
“There are indications Christmas is coming early for retailers. Many shoppers didn’t wait until Halloween to hit stores before they went shopping. They were scared by the warnings about how some toys and gifts might be out of stock this year.
“The data suggests that the pinch on incomes is already felt by shoppers looking to find bargains at charity shops or on auction websites. A large portion of the 8.2% rise in volume in non-food shops was due to second-hand sales.
“There was an increase in clothing sales which rose 6.2% over the past month. Because people have waited so long to party, it is not surprising that customers are ready to pay more and get the latest fashions.
‘Other ONS data shows that more staff have headed back to the office now – with half of businesses saying their workforces had returned to their normal place of work up from a third in early September.
“Plenty” of employees want to be the best when meeting new colleagues. Renovating work clothes seems to have helped drive sales.
The sector in its entirety is nearly 10% better than it was prior to the pandemic. Fashion and other categories that were most affected by the crisis have almost recovered from pre-pandemic levels.
Online sales are also down slightly. This gives the high street an important boost as footfall in town centres continues to rise, especially at weekends and is helped by half-term. This increase in spending will be partly explained by shoppers’ concerns about delayed delivery and goods shortages.
“This year, this is especially significant because our customers have indicated that they intend to make Christmas even more special due to the disappointing cancellations last year during lockdowns and tier restrictions.
“And we’re also witnessing the unwinding pent-up demand and the expenditure of lockdown savings. This is no doubt supported with increased employment levels, as the government furlough program was not unwound.
While this enthusiasm appears to continue through November, when Black Friday deals are attracting more interest than ever before, the real question is for retailers whether that momentum will last into December. Inflation, especially for non-discretionary expenditure, is expected to rise in 2011, as well as the possibility of tax and interest rate increases. This will be a significant drag on the sector.
Jackie Mulligan is an expert in the Government’s High Streets Task Force. She was also the founder of Shopappy’s local shopping platform.
“We are home to over 4,000 small-scale high street shops and things for them have not been easy as they approach Christmas. It is becoming unbearable for them to lose all of the Government support, as well as runaway inflation and rising costs due to supply chain issues.
“Many businesses are faced with the dilemma of whether or not to raise prices for their products and/or services in order to alleviate financial stress.
“Throw Black Friday in the mix” which reduces revenue for small high-street retailers is a sure way to make many face an existential crisis. This Christmas, it is more important than ever that people shop locally because small retailers on the high streets may be unable to survive.
The sales volume of other stores, such as second-hand merchandise stores, increased by 7.2% over September 2021.
Erin Brooks is the European Retail and Consumer Practice Leader at Alvarez and Marsal. She said that sales have increased during this time, probably due to early discounts. Many retailers are careful about planning promotions so there’s no rush for peak times like Black Friday.
“Although Black Friday is a big deal, this year’s event may not be quite as exciting as it was in years past. Shoppers who are concerned about inflation or trying to save money will likely hold off buying the expensive items that have become synonymous with Black Friday.
And Jessica Moulton, senior partner and leader of the retail and consumer packaged goods practice at McKinsey & Company, said: ‘There appears to be some early Christmas buying compared to previous years, probably spurred by concerns about item availability. A desire to not miss the holiday season.
“Notably, there seems to be a stable split between physical and online shopping, with online 8 per cent higher than it was before the crisis. While consumers are taking advantage all of the changes retailers have made during covid, they prefer to shop in stores for seven out of 10 purchases.
According to the Office for National Statistics, October saw a rise in retail sales due to higher non-food sales.
Richard Lim, Chief Executive of Retail Economics stated that ‘a lacklustre sector performance masked an polarisation among the performance of non-food retailers and food retailers.
“Clothing shops reported earlier Christmas shopping, with sales rising significantly over the previous year. A return to work is also likely to have been a factor. Food retailers were unable to meet last year’s sales levels, despite consumers being more willing to eat out.
“Looking ahead, the consumer market has declined sharply in recent months. The industry is currently without the Christmas boost it needs.
Inflation levels at a decade-high level, rising interest rates and increasing concerns over personal finances could cause some people to reduce spending when it is most needed.
‘Many retailers have struggled to secure goods for vital trading periods, so discounting may be a last resort as profit margins are already extremely pressured.
UK retail sales rose in Oct, ending a 5-month-long run of declining or flatlining sales. Pictured in Glasgow, May: Shoppers
Jamie Rackham is the founder of Not On Amazon on Facebook, where 156,000 independent sellers sell their products free of charge.
‘Though the October retail sales figures are encouraging, many independents are being affected by rising costs and inflation as well as reduced consumer spending and financial support.
Meanwhile separate ONS figures showed today that British public sector net borrowing, excluding state banks, totalled £18.799billion in October – above economists’ average forecast in a Reuters poll of £13.8billion.
The public sector net cash requirement leapt to £61.452billion in October from £6.061billion in September, driven by an expansion of the Bank of England’s Term Funding Scheme to support lending.