Press release

22 May 2020 London, GB

UK retail sales fall record 18.1% month-on-month in April as lockdown restrictions impact is felt

Retail sales volumes fell a record 18.1% month-on-month and 22.6% year-on-year in April as they were impacted by the lockdown restrictions imposed on 23 March.

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  • Retail sales volumes fell a record 18.1% month-on-month and 22.6% year-on-year in April as they were impacted by the lockdown restrictions imposed on 23 March
  • April’s 18.1% fall in retail sales volumes was more than three times the 5.2% month-on-month drop seen in March, which highlighted the impact of the restrictions
  • The weakness in retail sales was widespread in April, with even food sales seeing a 4.1% decline. Only non-store retailing saw an increase
  • 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 jumped to a record 30.7% in April from 22.3% in March and 19.1% in April 2019
  • Fuel sales fell 52.0% month-on-month as the lockdown led to a sharp decline in private transport journeys. Consequently, retail sales volumes excluding fuel were down 15.3% month-on-month and 18.4% year-on-year in April
  • The retail picture will remain particularly difficult until the Government starts allowing non-essential retailers to open as part of the easing of the lockdown
  • Meanwhile, the near-term fundamentals for consumer spending have clearly taken a very substantial downturn as a result of coronavirus. Many people have already lost their jobs, despite the supportive government measures while others will be worried that they may still end up losing their job once the furlough scheme ends. Additionally, many incomes have been negatively affected
  • Furthermore, consumers are highly likely to continue to adopt a very cautious approach to discretionary purchases given the current uncertain economic environment
  • The EY ITEM Club suspects that consumer spending will contract by around 15% quarter-on-quarter in the second quarter, thereby being the major factor in expected GDP contraction around 15% quarter-on-quarter

Howard Archer, chief economic advisor to the EY ITEM Club, comments:

Retail sales volumes fell a record 18.1% month-on-month and 22.6% year-on-year in April as they were hit by the full impact of the lockdown restrictions that were imposed on 23 March. This notably included the closure of non-essential retailers. Unsurprisingly, a BRC/ShopperTrak survey showed shopper footfall down 84.7% year-on-year in April.

This followed a drop of 5.2% month-on-month in March when sales had only been affected by just over a week from the lockdown. This meant that retail sales volumes had contracted 1.6% quarter-on-quarter over the first quarter.

Retail sales volumes were down 8.6% in the three months to April compared to the three months to January.

Retail sales excluding fuel fell 15.3% month-on-month and 18.4% year-on-year in April; this reflected fuel sales falling 52.0% month-on-month as the lockdown led to a sharp decline in private transport journeys.

Food sales fell 4.1% month-on-month in April after they had surged 10.1% in March due to consumer stockpiling.

All other retailing sectors saw substantial weakness in April except non-store retailing where sales rose 18.0% month-on-month.

This included large drops in clothing and textile sales (down 50.2% month-on-month) and household goods (down 45.4% month-on-month).

Online sales as a share of total retail sales jumped to a record 30.7% in March as consumer switched to online purchases as coronavirus increasingly impacted. This was up from 19.1% in April 2019.

The annual retail sales deflator fell 0.6% year-on-year in April, primarily due to fuel prices being down 11.6% year-on-year. This followed a flat reading in March, which had been 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 0.6% in April from 0.3% in March and 0.2% in February.

Outlook

The retail picture will remain particularly difficult until the Government starts allowing non-essential retailers to open as part of the easing of the lockdown.

Meanwhile, the near-term fundamentals for consumer spending have clearly taken a very substantial downturn as a result of coronavirus. Many people have already lost their jobs despite the supportive government measures – as was highlighted by a 856,500 rise in claimant count unemployment in April – while others will be worried that they may still end up losing their job once the furlough scheme ends. Additionally, many incomes have been impacted. The only recent good news for consumers has been inflation slowing to just 0.8% in April, the lowest level since August 2016.

Furthermore, consumers are highly likely to adopt a very cautious approach to discretionary purchases given the current highly fraught and uncertain economic environment. Consumer confidence currently remains at record low or near record low levels, with most measures reporting most consumers seeing it as a very bad time to make major purchases.

The EY ITEM Club suspects that consumer spending will contract by around 15% quarter-on-quarter in the second quarter, thereby being the major factor in expected GDP contraction around 15% quarter-on-quarter.