UK retail sales grow again in August, underpinned by online

UK retail sales grew 3.9% on a total basis in August, the third consecutive month of growth for the sector according to the KPMG-BRC sales monitor.

Covering the four weeks from 2-29 August, the 3.9% total sales increase was higher than the three-month average growth of 3.5% and substantially above the 12-month average decline of 1.6%, providing more encouraging signs for the sector following the damaging Covid-19 lockdown.

This performance was underpinned by a continued surge in online purchases since the Covid-19 pandemic struck, with online non-food sales up by 42.4% in August 2020. This represented a slight dip compared to the three-month average of 44.2% but was substantially higher than the 12-month average of 22.9%.

And the proportion of non-food sales made online was 39.3% in the four-week period, up from 29% at the same time last year. This is slightly lower than the 42% non-food online penetration rate recorded in July, suggesting consumers are becoming more comfortable shopping in-store.

The monitor also found that in-store non-food sales declined by 17.8% in the three months to August, which is an improvement on the 12-month Total average decline of 18.4%. In this three-month period, food sales were up by 5.9%, an increase on the 12-month total average growth of 3.4%.

Helen Dickinson OBE, chief executive at the British Retail Consortium (BRC) commented: “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 reopening 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.”

Paul Martin, UK head of retail at KPMG added: “The online channel remains prominent, with penetration rates still high at 39.3% 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.”