BRC underscores the retail crisis

The British Retail Consortium (BRC) has reported that total retail sales decreased by 4.3% between March 1 and April 4 2020, compared with a decrease of 1.8% in March last year. This is the worst decline since the retail sales monitor began in January 1995.

The last two weeks of March saw a sales decline of 27%, in sharp contrast with a 12% rise during the first three weeks of the month. Figures from Barclaycard this week have shown that consumer spending fell by 6 per cent year-on-year in March.

The BRC has warned that hundreds of thousands of jobs in the retail sector are at risk of being lost, with big brands like Oasis and Warehouse already being pushed into administration as the Covid 19 crisis deepens and demand for clothing plummeted. Iconic home and gift brand, Cath Kidston, is also on the brink of administration, putting 950 jobs at risk. However, most of the company’s employees were furloughed on 22 March and will receive 80% of wages up to £2,500 a month from the Government.

Helen Dickinson OBE, Chief Executive, BRC, said: “In March, the necessary measures to fight the spread of coronavirus led to the worst decline in retail sales on record. Furthermore, the headline figure masked even more dramatic swings: food and essentials faced an unprecedented surge in demand in the early part of March, only to drop significantly into negative growth after the lockdown and introduction of social distancing in stores. The closure of non-essential shops led to deserted high streets and high double-digit declines in sales which even a rise in online shopping could not compensate for. Sales of computers and accessories, board games, and fitness equipment all rose sharply as a result of the move to home-schooling and work-from-home. In contrast, demand for the latest fashion ranges significantly declined.

“The crisis continues; the retail industry is at the epicentre and the tremors will be felt for a long while yet. Many physical non-food retailers have been forced to shut down entirely or to limit themselves to online only to protect customers and staff. Consequently, hundreds of thousands of jobs at are risk within these companies and their supply chains. At the same time, supermarkets brace themselves for lower sales, while still spending huge sums on protective measures, donating to food banks and hiring tens of thousands of temporary staff. We welcome the Government’s actions to date, yet millions of livelihoods rely on their continued support.”

Online Non-Food sales increased by 18.8% in March, against a growth of 2.5% in March 2019*. The non-food online penetration rate increased from 29.3% in March 2019 to 43.5% this March.

Paul Martin, UK Head of Retail, KPMG, commented: “Retail sales experienced an historic drop in March. Total sales may ‘only’ be down 4.3%, but the sharp divide between food and non-food, and between physical and online, is far more drastic. Also, the UK’s closure of non-essential stores only started at the backend of the month, so it’s likely worse data is yet to emerge.

“Staying home has seen a surge in sales of food and drink; computing equipment, toys to keep children entertained, and unsurprisingly health-related goods too. Yet our high streets are completely void of footfall, and non-food categories like fashion have been forced into hibernation. With little alternative for non-essential retail on offer, online penetration has soared to 43.5%.

“Non-essential retailers have had to immediately address cash preservation and liquidity, furlough parts of their workforce and understand how to access various government support schemes. Meanwhile, essential retailers have focussed on stabilising their supply chain and product availability, whilst focussing on the safety and welfare of their employees and customers.

An uncertain future lies ahead and the industry’s reset button has clearly been pressed. Smart retailers will already be thinking about what this means for the future, but the resilience of the sector cannot be underestimated. Likewise, we cannot overlook the huge contribution many retail workers have made to help the nation during the crisis.”