Retail sales start to bounce back

This is as a result of several drivers including the re-opening of many physical stores, ongoing government furlough support and an expansion of online capacity.

Another important factor that has benefited the retail sector is the transfer of spending that in other years might have gone on foreign holidays. The average household spends more than £2,000 a year on overseas holidays, many of which have been cancelled or postponed as a result of the pandemic.

The Retail Economics report also shows that retail footfall has recovered at a slower pace in the UK than elsewhere in Europe. While around one third of British consumers think the way they shop will change permanently, with a long-term shift towards more online retail.

Food and drink

Food sales were up 7.2% in June, thanks largely to the ongoing closure of bars, pubs, restaurants and cafés. Online food sales rose 129% as businesses continued to boost e-commerce capacity. Larger food retailers performed better than their smaller rivals, with sales at the former up by almost 8% compared with a decline of 1.3% among the latter.

Homewares, DIY and household goods

Computing, furniture and other non-food, which covers DIY and gardening, showed the highest rates of growth on a total basis, with homeware sales as a whole up 7.5% in June. The hardware, paints and glass category saw growth of 12.8% as consumers increased spending on domestic improvements.

Fashion

Clothing and footwear continued their rapid decline, down 29.7% and 35.6% respectively in June, although these figures represent a slower downturn than in preceding months.

The decline in footfall levels eased as the month progressed in both retail parks and UK high streets.

E-commerce and online

The shift online continues apace with sales in June up 73.4% on 2019, accounting for £1 in every £3 spent, according to the Office for National Statistics. Retail Economics predicts that online will account for more than a quarter of all retail spending in 2020, reaching £90bn, up £12bn on last year. The online penetration rate is expected to hit 25% this year.

Meanwhile, the Government has announced £20m in new funding to help small and medium-size businesses in England with grants for new equipment and advice worth up to £5,000 a time. Ministers are also reportedly considering some form of online sales tax to help level the playing field for physical retailers.

Santander support in the UK

This is a crisis in which brands will be remembered for how they act. For our part, we’re continuing to look at how to serve clients better. We have a number of initiatives to support retail and wholesale clients (in addition to our Trade Club & Wholesale & Retail International connectivity proposition).

• Supply chain diversification and finance solutions – in recent webinars we’ve addressed this topic for homewares and fashion brands, as well as for food and drink retailers and wholesalers. In the case of the latter, we recently held a webinar showcasing what South Africa may be able to offer in this regard. It’s a country that exports 90% of its fresh fruit and offers counter-cyclical harvesting seasons to Europe. We have an ecosystem of partners in South Africa that can support UK businesses. We also have a supplier finance solution that can strengthen supplier relationships. Detailed insights and a webinar recording can be found here
• Santander Retailer Offers – we’re working on a project to make it possible for brands to sell their excess stock online through our Retailer Offers programme. It enables around 2.7 million Santander personal customers to earn cashback when shopping at selected merchants. More details here
• Liquidity management – for businesses selling essential goods and experiencing increased demand, we’re offering targeted support for short- and medium-term liquidity management to make sure they can optimise returns on surplus funds. More details here

To discuss how Santander can help your business during the coronavirus pandemic, please contact Sukh Nat, Head of Wholesale & Retail on sukhjeeven.nat@santander.co.uk