The retail sector has been through a great deal of late and the pandemic has meant much of retail bounced between being open and closed, significantly impacting sales and changing consumer behaviours.
In March 2020, non-essential retail stores began to close, pushing many consumers to buy goods online. In this context, while all comparisons are provided on a year-on-year (YoY) basis, those focused on online/in-store have also been compared with March 2019 (Yo3Y). This will be clearly signposted below.
Sales figures are not adjusted for inflation. Given that both the March SPI (BRC) and February CPI (ONS) show inflation running at historically high levels, a portion of the sales growth will be a reflection of rising prices rather than increased volumes.
Covering the five weeks 27 February – 2 April 2022
- On a Total basis, sales increased by 3.1% in March, against an increase of 13.9% in March 2021. This is worse than the 3-month average growth of 6.9% and the 12-month average growth of 10.3%.
- On a three-year basis, Total retail sales grew 5.4% (Yo3Y) during March compared with the same month in 2019.
- UK retail sales decreased 0.4% on a Like-for-like basis from March 2021, when they had increased 20.3%. This was worse than the 3-month average growth of 3.2% and the 12-month average growth of 6.5%.
- Over the three months to March, Food sales decreased 2.6% on a Total basis and decreased 3.1% on a Like-for-like basis. This is below than the 12-month Total average growth of 0.8%. For the single month of March, Food was in decline year-on-year.
- Over the three-months to March, Non-Food retail sales increased by 14.9% on a Total basis and by 8.6% on a Like-for-like basis. This is worse than the 12-month Total average growth of 18.3%. For the single month of March, Non-Food was in growth year-on-year.
- Over the three months to March, In-Store sales of Non-Food items grew 92.9% on a Total basis and 74.9% on a Like-for-like basis. This was an improvement on the Total 12-month average growth of 69.9%.
- On a three-year comparison, over the three months to March, In-Store sales of Non-Food items declined 18.2% (Yo3Y) on a Total basis and 3.9% (Yo3Y) on a Like-for-like basis since March 2019.
- Online Non-Food sales decreased by 29.0% during March, compared with growth of 64.7% in March 2021. This is worse than the 3-month decline of 27.3%.
- On a three-year comparison, Online Non-Food sales increased by 38.9% (Yo3Y) in March. This is broadly in line with the 3-mth average increase of 38.8%.
- Non-Food Online penetration rate decreased to 38.5% in March from 63.0% in March 2021. However, it was up 9.2 percentage points on the 29.3% seen at the same point in 2019.
Helen Dickinson OBE, Chief Executive | British Retail Consortium says:“As consumer confidence continued to sink, March saw sales slow, and while spend remained above last year this likely reflects higher prices. Beauty and fashion items were popular last month, as consumers took to their town and city centres for some retail therapy in the run up to Mother’s Day. While it is promising to see experiential shopping back in fashion, much in-store retail has not recovered to its pre-pandemic level. Online sales also decreased compared to last year but remain well above 2019 levels due to investment by retailers in their digital offer.
“The rising cost-of-living and the ongoing war in Ukraine has shaken consumer confidence, with expectations of people’s personal finances over the next 12 months reaching depths not seen since the 2008 financial crisis. Furthermore, households are yet to feel the full impact of the recent rise in energy prices and national insurance changes. There is also potential for further supply chain disruption, with China putting key manufacturing and port cities into lockdown. Ultimately, consumers face an enormous challenge this year, and this is likely to be reflected in retail spend in the future.”
Don Williams, Retail Partner, KPMG adds:“Growth on the high street continued last month with total sales up 3.1% compared to March 2021, driven by a strong performance across most non-food categories. However, the drag came from food sales which were down 6.1%, potentially due to the timing of Easter in 2021 and compounded by the impact of the lockdown in March last year.
“Online sales fell across all categories compared to March 2021, but penetration rates remain high confirming the “locked in step up” in online purchasing. This continues to force retailers to focus on finding the most effective mix between physical and online retailing.
“Sales growth in March rose at the slowest rate so far this year, suggesting clouds on the horizon as household budgets come under pressure from rising costs, an increasing tax burden and competition from holidays. There is concern on what this could mean for consumer confidence and the impact on discretionary spend. Additionally, retailers are facing their own battle with rising costs and inflation, and are walking a tightrope between absorbing rising costs themselves or passing these on to consumers, when competition for share of a shrinking wallet is increasingly fierce. The best retailers will continue to balance attention on areas that can yield cost and efficiency gains with a clear understanding of their customer and what they want to buy and how. The primary concern now is whether consumers will choose to reduce their physical and virtual shopping to counteract rising household bills and reduced household income.”
Food & Drink sector performance | Susan Barratt, CEO | IGD
“Food and drink sales struggled in March, partly due to facing strong comparatives to 2021. Not only were sales elevated last year due to lockdown, but Easter was also earlier and we’re yet to see holiday spending ramp up this year.
“It is no surprise that shopper confidence continues to fall and is now lower than the previous low of December 2013 when the horsemeat scandal impacted the food industry. There was a brief peak in confidence when it looked like oil prices might come down, but with 50% of shoppers now expecting food prices to become much more expensive, this optimism was short-lived. These challenges affect shoppers in different ways, with household cutbacks seeing less affluent shoppers skipping meals to save money. This volatile time is set to continue as the reality of the energy price increase, as well as general inflation, hits home for shoppers.”
