Online sales share hits record high as bricks-and-mortar stores suffer amid lockdown

Retail sales plunged last month as vast swathes of the high street were forced to shut in the latest attempt to curb the spread of Covid-19, according to official UK figures.

An almost empty Buchanan Street in the centre of Glasgow as people observe the spring 2020 lockdown. Non-essential stores were closed again more recently under tighter restrictions, hammering trade. Picture: John Devlin

The Office for National Statistics (ONS) said UK retail sales volumes fell 8.2 per cent in January compared with December 2020 after non-essential retailers shut their doors to customers.

The result was significantly worse than analyst expectations, with a consensus of economists predicting a 2.5 per cent decline for the month.

Sales had nudged up 0.3 per cent in December as Christmas demand and the relaxation of pandemic restrictions provided some respite for retailers.

Last month’s sales were once again propped up by a surge in online trading, with digital spending hitting a record proportion of 35.2 per cent of all takings.

Jonathan Athow, deputy national statistician for economic statistics at the ONS, said: “Department and clothing store sales were particularly affected.

“However, the decrease seen this time was not as large as that of the first lockdown, as some stores have adapted to the current circumstances, with services such as click-and-collect helping to cushion the fall.

“The share of online sales soared to a record high and accounted for over a third of total spending. It was also a strong month for food stores, due to the closure of pubs and restaurants.”

Susannah Streeter, senior investment and markets analyst at financial services firm Hargreaves Lansdown, said: “Sales have fallen off a cliff again, with the lockdown in January proving even more punishing for retailers than the November restrictions. After the Christmas splurge, consumers who did have cash to splash were clearly battening down the hatches, and squirreling rather than spending.

“With the economic outlook bleak given the rise in unemployment expected, building up financial buffers is a prudent course of action, but still a difficult pill to swallow for struggling retailers.

“The scale of the accelerated shift to digital sales over the course of the pandemic has been brought into sharp focus by the sharp difference in fortunes experienced by companies at either end of the retail spectrum.”

Karen Johnson, head of retail and wholesale at Barclays Corporate Banking, said: “Although these results are the first of the new year, there’s nothing new about the state of lockdown that the UK retail market finds itself in.

“As with previous lockdowns, there have been some rays of sunshine to report amidst the clouds. Consumers remain committed to improving the surroundings that they find themselves in most at the moment: as spending on items within the home has continued strongly.

“There have also been some successes to report amongst retailers providing ‘feel-good’ subscriptions that can be delivered to the door, with food boxes and fresh flowers all rising in popularity.”

Earlier this week it emerged that Scotland’s retail sector was “trapped in the depths of a dark and dismal winter” after the run of failing sales figures extended to a 12th successive month in January.

Total sales north of the Border tumbled 27.9 per cent last month compared with January 2020, according to the latest sales monitor from the Scottish Retail Consortium (SRC) and KPMG.

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