Shoppers helped fuel a mini relief rally for retail in January shrugging of cost of living crisis, for now
Shoppers helped fuel a mini relief rally for retail in January shrugging of cost of living crisis, for now
- Retail sales volumes rose by 1.9% in January 2022 following a fall of 4.0% in December 2021, revised down from 3.7%.
- Sales volumes were 3.6% above their pre-coronavirus February 2020 levels.
- Non-food stores sales volumes rose by 3.4% in January 2022, as home improvement sales volumes picked up.
- Automotive fuel sales volumes rose by 4.1% in January 2022 following a fall of 5.0% in December when increased home working and lower retail footfall reduced travel.
- Food store sales volumes in January 2022 fell below pre-coronavirus levels for the first time and were 0.8% below where they were in February 2020.
- 76% of consumers now say they are feeling the effects of the cost of living squeeze.
The ONS has released the latest retail sales snapshot for the UK*
https://www.ons.gov.uk/businessindustryandtrade/retailindustry/bulletins/retailsales/january2021
The ONS has released data on footfall and the cost of living squeeze **
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown
‘’Shoppers helped fuel a mini relief rally for retail in January, with sales lifting after Omicron’s shock to the system in December, which was even deeper than first thought. Furniture and department stores in particular benefited from a New Year boost to sales, as lockdown savers opened their wallets. After having spent many more days confined to home due to infections and the mass cancellation of events in December, there was clearly an urge to revamp rooms and add back some sparkle in the dull days of January. Sales volumes in furniture and lighting stores surged by 16.6% and electrical goods stores rose by 16%: above their pre-pandemic levels in February 2020.
Consumers appeared to be shrugging off mounting cost of living crisis and that trend still appears to be continuing for now, with a trip to the shops becoming more popular through February. According to other data from the ONS**, in the week to the 12th February overall retail football in the UK increased by 2% from the previous week and was 86% of the level seen in 2019, the fifth consecutive week of increasing retail footfall.
Retailers will be cheering on signs that shoppers are voting with their feet to support the high street, but plenty of big spenders may slink away in the months to come. The sales uplift in January shows the Omicron recovery is underway but retailers haven’t yet recouped all of December’s losses. At some point lockdown savings will be spent, and the rapid rise in prices on supermarket shelves, energy bills and petrol forecourts, combined with looming tax increases, is highly likely to put a dampener on consumer spending. The warning lights are already blinking in other data out this week from the ONS. More than 3//4 of adults say their cost of living had increased over the last month; up from 69% in the last, period showing that price rises are beginning to cut through to consumer sentiment.’’
Other key trends in January retail sales data:
- ‘’January sales appeared to be few and far between for fashion retailers as clothing stores reported a 5% fall in retail sales during the month, with levels more than 12% down on pre-pandemic. Inflation data showed that sales discounts weren’t as deep as last January, which may have put shoppers off.
- Grocers are no longer on a pandemic supermarket sweep with food store volumes falling below pre-pandemic levels for the first time. Shoppers are widening their spending targets and splashing the cash more on services instead.
- The dial has been moved back on the e-commerce shift, with the proportion of retail sales online falling to 25.3% in January 2022, its lowest proportion since March 2020 (22.7%).
- But we are not giving up on new found digital shopping habits as the percentage of retail sales made online was still higher than before the coronavirus pandemic (19.8% in February 2020).
- There were more queues at petrol forecourts as drivers who had deserted the pumps in December, had more reasons to fill up as fears eased over the seriousness of the Omicron variant and travel resumed. Automotive fuel sales volumes rose by 4.1% in January 2022 following a fall of 5.0% in December but sales volumes in January 2022 were still 3.3% below their February 2020 levels. With prices hitting a record high last weekend, this is going to put another dent in their spending power.’’
