The second lockdown has resulted in yet more casualties on the high street, with industry giant Arcadia the latest retailer to fall into administration. Despite this, UK retail sales remained strong in October with high growth rates, demonstrating that the sector continues to be one of winners—and losers.
The high street continues to struggle despite soaring retail sales
Total retail sales grew for the fifth consecutive month in October, reporting high year-on-year value and volume growth of 7.7% and 7.8% respectively—the largest increase in 2020.
At a subsector level, there was strong growth in food, household goods, and non-store retailing, demonstrating that the recovery continues to be led by essential, DIY, and online shopping—especially with non-essential retail closed.
Fashion and Department stores continue to struggle with Burton, Dorothy Perkins, and Topshop owner Arcadia falling into Administration citing the disruption caused by the pandemic. Reflecting that this is one of the largest corporate casualties of the COVID-19 pandemic so far, JD Sports pulled out of a rescue deal for department store chain Debenhams, with the failure of Arcadia said to be a factor in the decision given the importance to its concession business.
It was not all doom and gloom for the retail sector, however. Online retailing continued to benefit from the high street’s demise, with internet sales reaching a huge 28.5% of all sales, suggesting a fundamental shift in consumer purchasing habits.
House price growth remains strong despite unemployment uptick
The average price of UK property increased by 0.9% to £229,721 in November, an annual growth rate of 6.5%—the highest since January 2015, despite the disruption caused by the COVID-19 pandemic. As we enter 2021, the market is likely to be impacted by lower consumer confidence, a less robust labor market, and the reinstatement of the full stamp duty tax.
Unemployment surged to 4.8% in the three months to September, as redundancies reached a record high of 314,000 between July and September, an increase of 195,000 from the previous year. Despite the bearish news, with Rishi Sunak announcing an extension to the income support scheme, unemployment remains significantly below the Office for Budget Responsibility worst-case projections of up to 12% before Christmas.
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