Retail sales plummet 8.2% in January, latest ONS figures reveal

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In January 2021, retail sales volumes decreased by 8.2% when compared with December 2020 as tighter nationwide coronavirus (COVID-19) restrictions affected sales, according to the Office for National Statistics (ONS).

Retail sales volumes were 5.5% lower than before the pandemic in February 2020 indicating that the impact of restrictions on the retail sector was not as large as that seen in April 2020 during the first full month of retail restrictions when sales fell by 22.2% when compared with levels before the pandemic.

All sectors saw a monthly decline in volume sales in January 2021 except for non-store retailers and food stores, who reported growth of 3.7% and 1.4% respectively when compared with December 2020.

In the three months to January 2021, retail sales volume fell by 4.9% when compared with the previous three months, with strong declines in both clothing stores and automotive fuel.

The proportion spent online soared to 35.2% in January 2021, the highest on record; this compares with 29.6% in December 2020 and 19.5% reported in January 2020.

All store types reported an increase in their proportion of online spending in January 2021 when compared with December 2020; with food stores reaching an historic high of 12.2% of sales conducted online.

Commenting on ONS Retail Sales for January trading, Richard Lim, CEO, Retail Economics, said: “Any momentum built up in the run-up to Christmas was deflated by the third national lockdown in January. Retail sales plunged at the fastest rate since the pandemic broke last year as January blues were heightened by further restrictions to control the spread of the virus. 

“However, the proportion of online sales reached new heights. The pandemic has driven a step-change in online shopping and a new wave of digital shoppers have broken down the initial barriers of setting up online accounts, entering payment details and overcoming issues of trust. Consumers now seamlessly transition to lockdown shopping habits, switching to online channels they discovered during previous lockdowns. It’s inevitable that some of these behaviours will become a permanent feature of the industry as consumers embrace a new way to shop and the industry boosts online capacity.” 

Jo Causon, CEO at the Institute of Customer Service, said: “Whilst few will be surprised by today’s decline in sales – they will still come as yet another blow to hard-hit retailers. As we continue to navigate the impact of a third national lockdown, the figures act as a stark reminder that despite the hope offered by a vaccine rollout, the crisis is far from over.

 “As we approach nearly a year of shake ups and uncertainty, retailers must prioritise their service offering if they are to survive. Those that focus on consistency of service over short term sales will be the most effective in building trust and maintaining loyal customers throughout the ongoing restrictions and beyond.” 

Lynda Petherick, head of retail, Accenture UK, said: “It’s been an exceptionally challenging start to the year for retailers, with January falling victim to yet another drop in total sales volume. With non-essential retail stripped of all in-store footfall as the UK entered yet another national lockdown, retailers were forced to rely on e-commerce to capitalise on the typical January sales season, with online sales soaring to eat up a large proportion of total retail spend.”

 “Retailers will be holding their breath for the government’s ‘roadmap’ out of lockdown. There is light at the end of the tunnel and businesses can now be thinking about how their long-term strategies can best exploit pent up consumer demand, while balancing exciting and safe in-store experiences. However, these plans must remain on ice for now, with the immediate focus on continuing to capitalise on the recent record sales of non-food items online, by ensuring e-commerce offerings are as seamless and engaging as possible.”