After more than two full months of lockdown, non-essential shops are finally able to reopen, with retailers beginning to adjust to their "new normal". However, May’s retail data continues to highlight the huge challenges retailers are facing as a result of COVID-19, in one of the most disrupted months ever seen in the sector.
COVID-19 causes further disruption for retailers
UK retail endured another challenging month in May, posting high annual value and volume declines of 9.7% and 9.8% respectively, as many shops remained closed due to COVID-19 restrictions.
At a subsector level, there were similar trends to April, with growth in food stores and non-store retailing. Meanwhile, all other sectors saw huge year-on-year declines, with both fashion and other-stores seeing declines of over 50% relative to last year.
With non-essential shops remaining closed throughout the month, footfall fell by a staggering 82.7%, despite some easing of lockdown measures.
Reflecting the unprecedented headwinds facing brick-and-mortar stores, shopping center giant Intu, which owns Lakeside in Essex and the Trafford center in Manchester, fell into administration in June after failing to secure an agreement with its creditors on its £4.5bn worth of debt.
However, it was not all doom and gloom for the retail sector. Online retailing enjoyed another strong month, with internet sales reaching an impressive 33.4% of total sales – the highest on record.
At a subsector level, both food and household goods saw increases over 100%, suggesting a fundamental shift in consumer purchasing habits, which is likely to have a long-lasting, and potentially permanent, impact on the sector.
Labor market signals challenging times ahead
The average price of UK property increased slightly in May to £218,902, reflecting modest year-on-year growth of just 1.8%, albeit based on much-reduced activity. As we enter the second half of the year, the market is likely to be impacted by lower consumer confidence, a less robust labor market, and increased political uncertainty around Brexit.
Unemployment remained at 3.9% in the three months to April, however with many employees still on furlough, the anticipated uptick in unemployment is yet to hit the official statistics.
More worryingly for retailers, job vacancies across the UK have fallen to their lowest levels for over three years, according to data from JobisJob, suggesting challenging times ahead for the labor market.