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Retail spending on three month downward spiral even before crisis

Retail sales in February fell for the fourth consecutive month across all stores but this was before the coronavirus outbreak really took effect.

The Office for National Statistics said that store sales had been largely unaffected by the Covid-19 outbreak although a small number of retailers said that online orders shipped from China were reduced.

In the the three months to February, the quantity of goods bought in store fell or the fourth consecutive month by 0.6 per cent.

The monthly growth rate in the quantity bought fell by 0.3 per cent, with a range of retailers providing feedback on the adverse effect of the extreme rainfall on sales.

When compared with the same month a year earlier, February 2020 remained flat; the lowest year-on-year growth rate since March 2013 at negative 1.6 per cent.

Online sales as a proportion of all retailing was 19.6 per cent in February 2020, up from the 19.1 per cent reported in January 2020.

Euan Murray, relationship director, Barclays Corporate Banking, Scotland, said: “Turbulent weather meant turbulent times for UK retailers in February, with three weekends of heavy storms limiting both the ability and appetite of consumers to go out and spend.

“Looking further ahead, spring weather was supposed to provide a breath of fresh air for UK retail, but the emergence of the Covid-19 public health emergency will have quashed any chance of a springtime bounce back. Consumers are now focussing on securing the essentials that they need on a day-to-day basis, so luxury items – including those usually purchased for holidays abroad – fall way down the agenda.

“There is potentially light at the end of the tunnel for retailers, given the extent to which people are ready and willing to spend online. However, consumer nervousness is still understandably widespread – so the extent to which online channels can compensate for lost high-street spending is yet to be seen.”

Howard Archer, chief economic advisor to the EY ITEM Club, said: “Retail sales volumes dipped 0.3 per cent month-on-month in February, causing them to be only flat year-on-year. This was the weakest annual performance since March 2013. Excluding fuel sales, retail sales volumes fell 0.5% month-on-month in February and were up 0.5 per cent year-on-year.

“Retail sales had previously risen 1.0 per cent month-on-month in January (1.6 per cent excluding fuel sales – the best performance since May 2018) after a very poor fourth quarter of 2019 when they fell 0.9 per cent quarter-on-quarter. The underlying softness in retail sales was evident in them being down 0.6 per cent in the three months to February compared to the three months to November.”

Published in Insider -