Festive headache for UK retailers after record run of sales declines: reaction

UK retail takings fell in August for the fourth consecutive month as grocery sales were impacted by more people returning to restaurants and pubs, official figures have revealed.

The Office for National Statistics (ONS) said retail sales volumes dipped 0.9 per cent last month, following a 2.8 per cent slide in July.

However, retail sales volumes remain 4.6 per cent ahead of pre-pandemic levels.

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The drop in sales for August came as a surprise to analysts, who had forecast a small increase for the month. It marks the first time since 1996 that retail sales have dropped for four months in a row.

Shoppers pictured on Edinburgh's famous Princes Street. Picture: Jane Barlow/PA Wire

Lisa Hooker, consumer markets leader at PwC, said: “The post-lockdown bounceback in retail spending appears to be running out of steam.

“As we head into autumn, retailers will be hoping that back-to-school and back-to-the-office will be a sign of back-to-normal for consumer demand, and also that the current supply chain pressures ease, as few of them can afford another cancelled Christmas.”

Oliver Vernon-Harcourt, head of retail at Deloitte, noted: “A perfect storm of labour shortages, supply chain issues and increased demand will continue to test retail leaders as we enter the ‘golden quarter’.

“Christmas will be impacted by these headwinds; there will very likely be shortages in some categories which will force consumers to make different choices.

“Retailers – particularly grocers – will have to decide which products to put on the shelves, prioritising higher-margin products where possible.”

Jonathan Athow, ONS deputy national statistician for economic statistics, said: "Sales fell again in August, though not nearly as much as in July, and, overall, remained above their pre-pandemic level.

"Other data suggest that the drop in food stores' sales is linked to an increase in eating out following the lifting of coronavirus restrictions.

"Meanwhile, motor fuel sales increased on the month as people ventured out more, but they remained below pre-pandemic levels."

Food store sales slipped by 1.2 per cent for the month, with many shoppers returning further back towards pre-pandemic habits.

It comes as data from Open Table has shown that restaurant reservations picked up last month while credit card providers highlighted a rebound in social spending.

Meanwhile, non-food stores reported a 1 per cent decline in sales volumes, driven partly by department stores, which saw a 3.7 per cent slide for the month.

Earlier this week, it emerged that Scottish retailers had suffered a “summer sales stutter” last month as the lifting of lockdown restrictions failed to get shoppers back to the high street en masse.

Industry figures showed that total sales in Scotland increased by 3.2 per cent in August, compared with the same month a year earlier, when they had decreased by 7.5 per cent as a result of the Covid crisis.

Measured on a two-year basis, total retail sales continue to perform below pre-pandemic levels, the Scottish Retail Consortium (SRC) noted.

SRC director David Lonsdale said: “The ending of physical distancing and removal of the cap on numbers allowed in-store a third of the way through the month failed to bring the anticipated boost, with retail sales still languishing almost a tenth below pre-pandemic levels.”

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