As the UK remains in lockdown, the disruptive impact of COVID-19 on retailers has become fully apparent with the release of April’s retail sales figures.

COVID-19 causes huge economic shock for retailers

Retail sales fell by a staggering 18% in April, the largest decline on record, as the UK navigated its first full month of lockdown measures. Several subsectors saw huge year-on-year declines with fashion, other-stores and household goods all seeing declines of over 50% relative to last year.

There was some better news in the food sub-sector which saw a 7% uplift compared to April 2019, as consumers continued to shop at essential retailers amid the ongoing disruption.

Unsurprisingly footfall, which was already on a downward trend prior to the lockdown, plummeted by 86% in April as many retailers were unable to open their stores during the month.

Capitalizing on footfall’s demise, internet sales saw a record month, with the proportion of online sales reaching 31%, compared to 19% a year ago. This trend was reflected across the spectrum with all store types, except non-retailing, reaching record proportions of internet sales as many companies shifted to online-only trading where possible.

Overall, April 2020 is likely to be remembered as a month that accelerated the structural changes within UK retail. As we progress towards 15th June and the re-opening of physical stores, shopping habits are likely to be materially different for some time with social distancing and other protective measures in place, forcing retailers to once again re-think their strategy.

Labour market outlook suggests no quick rebound for retailers

The UK unemployment rate fell by 0.1% to 3.9% in the three months to March, however, these positive figures are expected to precede a significant downturn in the UK labor market.

While the headline figure remains positive, the unemployment reporting date means that the anticipated uptick is yet to hit the official statistics. Worryingly for the UK economy, a recent survey conducted by CIPD and the Adecco Group suggests that more than a fifth of organizations are planning redundancies in the three months to July, suggesting a quick rebound for retailers may be unlikely.

figure 1 value and volume may 20  01
figure 2 subsector breakdown may 20 01v2
figure 3 unemployment and footfall breakdown may 20  01v2