- Retail sales volumes fell 5.1% month-on-month in March. A record increase of 10.1% in food sales outweighed by large falls in non-food sales (including clothing and textile sales falling by 34.8%) as non-essential retailers were shut as part of the Government lockdown on 23 March. The British Retail Consortium has reported that shopper footfall has fallen by 83% since the Government closed non-essential retail outlets in March.
- Retail sales volumes excluding fuel fell a smaller 3.7% month-on-month in March; this reflected fuel sales dropping 18.9% as the lockdown led to a decline in private transport journeys.
- Retail sales volumes contracted 1.6% quarter-on-quarter in the first quarter. This reinforces our belief that GDP likely contracted around 1.3% quarter-on-quarter in the first quarter.
- Apart from the food sector, the retail picture is gloomy and is likely to remain so until lockdown restrictions start to ease.
- The near-term fundamentals for consumer spending have clearly taken a substantial downturn as a result of coronavirus. Some people have already lost their jobs, despite supportive government measures and incomes have also been affected.
- Furthermore, consumers are likely to adopt a much more cautious approach to discretionary purchases given the current uncertain economic environment.
- Online sales are coming increasingly to the fore, but they can only make up a limited amount of the lost business. Significantly, online sales as a share of total retail sales reached a record 22.3% in March.
Howard Archer, chief economic advisor to the EY ITEM Club, comments:
Retail sales volumes fell a record 5.1% month-on-month in March and were down 5.8% year-on-year.
Retail sales volumes contracted 1.6% quarter-on-quarter in the first quarter. Prior to March’s 5.1% month-on-month drop, they had fallen 0.4% in February and risen 1.2% in January.
Retail sales excluding fuel fell a smaller 3.7% month-on-month and 4.1% year-on-year in March; this reflected fuel sales falling 18.9% month-on-month as the lockdown led to a sharp decline in private transport journeys.
Food sales jumped 10.1% month-on-month in March as consumers stockpiled food. Clothing and textile sales suffered the most falling 34.8% month-on-month but the weakness in non-food sales was widespread. There were also large month-on-month drops in sales of household goods (8.0%).
However, sales at department stores rose 2.2% month-on-month. Non-store retailing rose 5.8% month-on-month. This was partly attributed to the wet weather affecting sales at markets and stalls.
Online sales as a share of total retail sales reached a record 22.3% in March as many consumers switched to online purchases as coronavirus increasingly impacted.
The annual retail sales deflator was flat year-on-year in March, primarily due to fuel prices being down 2.2% year-on-year. This was the lowest level since July 2016 and down from year-on-year increases of 0.5% in February and a 13-month high of 1.1% in January.
Excluding fuel prices, the annual retail sales deflator rose to 0.4% in March after dipping to 0.2% in February to a six-month high of 0.7% in January from 0.3% in December.