UK retail sales return to growth despite lockdown

The run-up to the reopening of schools and increased spending on home improvement helped UK retail sales return to growth in February despite the national lockdown, according to the latest industry data.

Retail sales in the UK grew 1 per cent last month compared with the same period last year, a sharp reverse of a 1.3 per cent year-on-year contraction in January, according to an analysis by the British Retail Consortium trade body and consultancy KPMG.

Helen Dickinson, the BRC’s chief executive, attributed the rebound to anticipation of the phased easing of the third national lockdown, which started on Monday with pupils returning to classrooms. She said this “prompted a burst in spending on non-food items, such as school uniforms”.

As non-essential stores remain closed until April 12 in England, the increasing reliance on internet shopping continued with non-food spending online almost doubling year-on-year to 61 per cent. This compares with 31 per cent in the same month in 2020, just before the pandemic hit.

Paul Martin, UK head of retail at KPMG, said that despite the extension of Covid-19 support measures in last week’s Budget beyond the summer, high street retailers would continue to endure “incredibly challenging conditions as they face subdued demand, thinner margins and rising logistics costs, alongside the accelerated structural changes to the sector”.

Meanwhile, the closure of the hospitality and leisure sector continued to weigh on overall consumer spending, which was down 13.8 per cent in February, according to data from Barclaycard, compared with a 16.3 per cent fall the previous month.

The payments company, which monitors nearly half the UK’s card transactions, said home improvement spending rose 10.3 per cent in February compared with the same month in 2020 as lockdown kept people indoors. Spending in supermarkets and on TV digital subscriptions and food takeaway continued to show very high annual growth in February.

Separately, a survey run by Barclaycard between February 19 and 22 showed consumer confidence rose to the highest level in 12 months, boosted by the pace of the vaccine rollout and government plans to begin easing lockdown.

Household savings also rose with more than 40 per cent of UK consumers reporting they had more money set aside compared with pre-pandemic levels. About a third of respondents said they planned to spend the extra cash on a holiday or a treat, fuelling hopes for a rebound in spending as the economy reopens.

Raheel Ahmed, head of consumer products at Barclaycard, said: “With consumers generally feeling more optimistic, there is a strong indication of a more prosperous period to come as the long-awaited recovery and life after lockdown begins.”