As the UK economy sank into recession and retailers slashed prices in the week leading up to the August bank holiday, the high street saw its best result since before the outbreak of the COVID-19 pandemic, new figures by accountancy and business advisory firm BDO LLP reveal.
According to BDO’s High Street Sales Tracker (HSST), in-store like-for-like sales declined by -28.1% in August from a base of -0.1% for the equivalent month last year, marking seven consecutive months of negative like-for-like sales this year. Many brands introduced discounts in anticipation of the bank holiday weekend, which gave in-store like-for-like sales a momentary boost. However, while August may have recorded the best total in-store result since February, lost revenues are mounting.
In-store like-for-like sales were negative for two out of three sectors in August, with homeware the only sector to record positive results. Lifestyle total like-for-like sales plunged by –29.4% in August from a negative base of -1.8% last year. The category recorded its seventh consecutive month of negative like-for-like sales.
Fashion in-store like-for-like sales fell by -32.5% this month from a positive base of +0.9% last year. Despite recording its best weekly result since early March in the final week of August (-22.58%), fashion has recorded six consecutive months of negative in-store like-for-like sales.
Homeware in-store like-for-like sales, however, increased by +0.7% this month, though failing to offset a base of -0.8% last year. August marks the second successive month of positive like-for-like sales for in-store homeware, boosted by strong results in the final week of the month.
The accelerated shift to ecommerce continued as total non-store like-for-like sales for August rose by +72.4% from a robust base of +18.6% last year. After a relative waning in prior weeks, non-store like-for-like sales leapt upwards in the final week of August (+85.15%) as bank holiday discounts convinced shoppers to part with discretionary spend. However even this substantial increase in non-store sales could not mitigate the drop of in-store sales, resulting in a total drop in like for like of discretionary spend of -3.3%.
Sophie Michael, Head of Retail and Wholesale at BDO LLP, said: “While the last week of August provided a moment of positivity, the reality is that this was largely a result of heavy discounting. As we enter the largest recession on record*, the outlook remains unsettled with constrained family finances and job market uncertainty continuing to impact negatively on discretionary spend.
“Coronavirus-related job losses are predicted to pass one million this month, having already decimated the retail sector which represents c.10% of the UK workforce. Job losses in retail grew at the fastest rate in more than a decade in the year to August and as we approach the end of the Government’s Job Retention Scheme, further job losses are anticipated. The Government’s support scheme has been a lifeline but further support from the Chancellor is vital to help the retail sector recover out of this pandemic.”
*Office of National Statistics, 12/08/20
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