Britain suffered worst retail sales on record in 2020

Cycle of lockdowns hit physical shops hardest with 25% drop in non-food sales

Shoppers in Windsor, Britain. The typically bumper Christmas period offered little respite for high street stores in December. Reuters

British retailers suffered their worst annual performance on record in 2020, as the cycle of lockdowns took their toll on fashion and homeware sales.

The sector suffered an overall fall in sales of 0.3 per cent on the year, according to the British Retail Consortium-KPMG retail sales monitor, with the typically bumper Christmas period offering little respite for high street stores.

While food sales rose 5.4 per cent in 2020 compared to 2019, non-food sales fell about 5 per cent, the trade body said. The drop in non-food sales in physical stores was even higher at 25 per cent, leaving the sector with its worst performance since the monitor started in 1995.

“Covid has led to 2020 being the worst year on record for retail sales growth. Physical non-food stores – including all of ‘non-essential’ retail – saw sales drop by a quarter compared with 2019,” said Helen Dickinson, chief executive of the BRC.

“Christmas offered little respite for these retailers, as many shops were forced to shut during the peak trading period, though this led to a rise in food-based gifts as many shoppers bought what they could from the shops that were still open.”

With shops in Britain now closed for the foreseeable future, costing them billions in more lost sales, many retailers are struggling to survive.

England’s third lockdown comes after physical shops had already endured months of closing and opening their premises in line with government regulations to curb the spread of Covid-19.

The end of the year eased the situation for some retailers, with sales over a five-week period from late November to early January 1.8 per cent higher than a year earlier.

Non-food sales jumped 44.8 per cent in December, as a higher proportion of shoppers headed online. Over 2020 as a whole, online retail increased by more than a third to account for 46.1 per cent of all sales.

Susan Barratt, chief executive of grocery research company IGD, said December experienced the highest ever festive spending in the UK food and grocery retail sector and was largely in line with the elevated trend through the year.

“Though last-minute changes put the brakes on larger family gatherings, shoppers nevertheless sought to make up for their disappointments by trading up to treat themselves and their immediate households with premium and luxury lines,” she said.

However, the retail figures indicate that the online shopping surge and re-opening of physical shops after the November lockdown did not boost sales enough to offset tighter restrictions that came into force across large swathes of the country in the middle of last month.

Marks & Spencer said earlier this month that a sharp drop in clothing and homeware sales in its Christmas quarter as Covid-19 restrictions hit demand.

The retail chain said UK revenue for its third fiscal quarter was 8.2 per cent lower than last year at £2.52 billion ($3.42bn), blaming “on-off restrictions and distortions in demand patterns” caused by the pandemic.

Paul Martin, head of retail at KPMG, said December, the most important month for the retail industry, experienced some growth due to the ongoing shift of expenditure from other categories such as travel and leisure.

“Once again, we saw big swings in the types of products being purchased and the channels used for shopping, with much of the growth taking place online where nearly half of all non-food purchases were made,” he said.

“Household-related and food item purchases were top of Christmas shopping lists with historic growth rates in contrast to fashion, accessories and beauty products which experienced double-digit declines.”

However, high street retailers lost out when further restrictions were imposed, he said, and looking ahead “fortunes will be mixed but pent-up savings and a successful vaccine rollout will help support recovery in the retail sector later in the year”.

“Retailers will also be hoping that the reopening of high streets and shopping centres will see a return to more normal levels of footfall,” he said.

Last year was also the worst year for high street job losses in more than 25 years, according to a report from the Centre for Retail Research earlier this month, as the pandemic accelerated the shift to online shopping.

Nearly 180,000 retail jobs were lost, an increase of almost a quarter on 2019.

Ms Barratt said shopper confidence will “remain fragile” this year as shoppers “grapple with the impact of the new national lockdown, economic downturn and a new relationship with the EU”.