The Scotsman

How we shop ‘has changed for­ever’

● Over­all sales grow but phys­i­cal shops struggle as con­sumers avoid city cen­tres

- By JANE BRADLEY Business · Retail · Shopping · Consumer Goods · Industries · United Kingdom · Paul Martin · British Retail Consortium · Martin · KPMG Corporate Finance

Phys­i­cal stores con­tinue to struggle, with new fig­ures show­ing how shop­ping habits ac­quired dur­ing lock­down may have been adopted per­ma­nently. On­line non-food sales rose by 42.4 per cent on a like­for-like ba­sis last month.

Shop­ping habits ac­quired dur­ing lock­down ap­pear to have been adopted per­ma­nently, ex­perts have warned, as phys­i­cal stores con­tinue to struggle, de­spite an­other month of retail growth over­all in Au­gust.

The Bri­tish Retail Con­sor­tium (BRC) said UK retail sales in­creased 4.7 p er cent on a like-for-like ba­sis last month, driven by fur­ni­ture and elec­tron­ics as peo­ple con­tinue to work from home.

How­ever, sales in phys­i­cal stores re­mained in de­cline as work­ers re­mained away from city cen­tres and con­tin­ued to shop on­line.

On­line non-food sales, mean­while, rose by 42.4 per cent, against a growth of 1.6 per cent at the same time last year, in­creas­ing the pro­por­tion of non-food sales made on­line from 29 per cent of all sales in Au­gust 2019 to 39.3 per cent this year.

The BRC re­port found that over the three months to Au­gust, in-store sales of non­food items de­clined 17.8 per cent on a to­tal and 8.5 per cent on a like-for-like ba­sis - lower than the 12-month to­tal av­er­age de­cline of 18.4 p er cent. He­len Dick­in­son, chief ex­ec­u­tive of the BRC, said: “De­spite an­other month of growth in Au­gust, retail sales re­main down over­all since the start of the pan­demic. Re­mote work­ing has con­tin­ued to help sales in home goods, such as food, com­put­ing, fur­ni­ture and TVS.

“Lock­down also ap­pears to have per­ma­nently changed some con­sumers’ shop­ping habits, with on­line sales con­tin­u­ing to boom de­spite shops re open­ing in June. Mean­while, city cen­tre re­tail­ers con­tinue to be dev­as­tated by low foot­fall and poor sales, as of­fice work­ers stayed away for yet an­other month.

“Many re­tail­ers are con­tin­u­ing to struggle, par­tic­u­larly those in cloth­ing, footwear and beauty, that are re­liant on high foot­fall lo­ca­tions. With rents ac­cu­mu­lat­ing, and the Septem­ber quar­ter pay­ment date fast ap­proach­ing, many re­tail­ers are hang­ing on by a thread.”

Paul Martin, UK head of retail at KPMG, which co-au­thored the re­port, said :“Whilst wel­come news, the com­ing months are far from prob­lem free, with eco­nomic un­cer­tain­ties – in­clud­ing the un­wind­ing of the fur­lough scheme – likely to leave many con­sumers think­ing care­fully about their spend­ing pri­or­i­ties.

“The on­line chan­nel re­mains prom­i­nent, with pen­e­tra­tion rates still high at 39.3 per cent for non-food. In­deed, the vast ma­jor­ity of on­line cat­e­gories re­alised sig­nif­i­cant growth in Au­gust. Clearly re­tail­ers have some se­ri­ous think­ing to do around what the fu­ture of the in­dus­try is go­ing to be ex­actly.

“While the over­all on­line pen­e­tra­tion rate has de­clined in re­cent months, the sig­nif­i­cant ac­cel­er­a­tion of the chan­nel is here to stay. With this in mind, re­tail­ers need to fo­cus on the cost of do­ing busi­ness, as on­line is gen­er­ally more ex­pen­sive to op­er­ate.”

The fig­ures come as a separate re­port from a com­pany which tracks one in four of all UK card trans­ac­tions said its data also showed a re­turn to con­sumer spend­ing growth in July.

Card­lyt­ics said that spend­ing growth peaked at +5 per cent dur­ing the week com­menc­ing 16 July.

 ?? PIC­TURE: JOHN DEVLIN ?? 0 Some shop­pers have ven­tured out since lock­down has been eased but over­all retail sales re­main down over­all
PIC­TURE: JOHN DEVLIN 0 Some shop­pers have ven­tured out since lock­down has been eased but over­all retail sales re­main down over­all

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