Balancing safety with increased trade

1 min read

Retail & Wholesale

This is the latest update from Santander’s Retail & Wholesale team on how the coronavirus pandemic is affecting our clients and the sector as a whole.

Retail & wholesale

While the retail sector is now fully open for business, retailers will continue to play a key role in battling the coronavirus pandemic. Government guidelines are in place for how they can operate safely including, since 24 July, rules requiring shoppers to wear face masks. Clearly, it’s vital that we now see a recovery in consumer confidence, but safety remains a priority.

The data suggests shoppers are returning. The latest retail sales figures registered the first increase since lockdown began, with total sales up 3.4% year-on-year in June according to the BRC-KPMG Retail Sales Monitor. On a like-for-like basis, UK retail sales were up 10.9% in June compared to the same month in 2019. The like-for-like figures excluded temporarily closed stores but included online sales, with this year's increase primarily driven by the latter.

Last June’s comparative figures show the progress being made. In June 2019, total sales and like-for-like sales actually fell 1.6% and 2.2% respectively compared to 2018. This year’s total figures for June were the highest recorded since May 2018, excluding Easter distortions. They compare favourably to the three-month average decline of 6.4% and the 12-month average decline of 2.1%.

Against that, the data also suggests coronavirus is still influencing shoppers’ decision-making. Non-food categories continue to grow as consumers spend on new essentials, such as computer supplies. With so many people working remotely, and managing home schooling, home-related products have also sold well, particularly online. Overall, online sales accounted for 34.7% of retail sales in June, up 11.7 percentage points on June 2019.


How the sub-sectors performed

Food and drink: Food sales increased 7.3% on a like-for-like basis over the three months to June, and by 3.8% on a total basis. This is higher than the 12-month total average growth of 2.7%. 
Online: The reopening of stores has released some pent-up demand, but it was online non-food sales that ultimately drove sales growth. These were up 48.2% in June compared to the year before. By contrast last year’s annual increase against June 2018 was just 3.3%. 
Household appliances: In-store sales in this category also increased. While the online penetration rate remained high at 84.3%, 21.8 percentage points higher than in June last year, it was lower than in May. Household appliances recorded a 54% increase in profit to £19.6m in the year to the end of March. With online sales up by 16% to £1.04bn, as customers bought fridges, freezers and home working equipment in response to lockdown. 
Clothing: Some categories, including clothing and footwear, are still being adversely impacted by coronavirus.  However, clothing sales did increase slightly as June progressed and children’s clothing continued to outperform, with growing children continuing to need to update their wardrobes. 

It’s also worth noting that the way people’s lifestyles have changed over the past few months has seen adult clothing sales shift away from formal and party wear to more casual dress. Retailers have cut back on their orders for the upcoming season as they’re already carrying excess stock. This did mean there was less stock in summer sales, particularly online, though discounts were deeper. One large online retailer reported a 10 percentage point increase in sales over the four months to the end of June.

With most retailers reporting surging online sales, the significant impact of coronavirus on the industry is likely to endure, with repercussions that will be felt for many years potentially acting as a drag on consumer spending. Store closures are ongoing and the pressure on the high street is set to remain. Retail parks continue to prove more resilient, benefitting from the offer of parking and generally more spacious stores, though footfall in June was still down 32.2% year-on-year.


How Santander can help

Throughout the crisis, we’ve shared a range of insights and developed new solutions to help clients across retail and wholesale, from demand generation to supply chain efficiency and diversification. We’ve shared many of these thoughts in our Views from the Industry webinar series, which remains available. Highlights include:

  • Lifestyle (USA/UAE): Global e-commerce: UK retail impact and global e-commerce opportunities. View here 
  • Lifestyle (Global): Optimise and transform brands to stay competitive in the new age of digital. View here 
  • Lifestyle and homewares (Asia Pacific): Tomorrow’s retail trends: Insights from global/Asia Pacific markets. View here 
  • Homewares and lifestyle (India): Supply chain diversification for homeware & apparel brands to India. Read here
  • Food and drink wholesale (South Africa): Direct sourcing opportunities for Food & drink wholesalers from South Africa. Read here

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