Business news

Retail sales drop for fourth month in a row

It represents the first time since 1996 that retail sales have dropped for four months in a row.

Shoppers in Belfast on the August bank holiday. Picture by Hugh Russell.
Henry Saker-Clark

RETAIL sales dropped in August for the fourth consecutive month as grocery sales were impacted by more people returning to restaurants and pubs, according to official UK Government figures.

The Office for National Statistics (ONS) said retail sales volumes dropped by 0.9 per cent last month, following a 2.8 per cent fall in July.

However, retail sales volumes remain 4.6 per cent ahead of pre-pandemic levels.

The drop in sales for August came as a surprise to analysts, who had forecast a 0.7 per cent increase for the month.

It represents the first time since 1996 that retail sales have dropped for four months in a row.

Jonathan Athow, ONS deputy national statistician for economic statistics, said: "Sales fell again in August, though not nearly as much as in July, and, overall, remained above their pre-pandemic level.

"Other data suggest that the drop in food stores' sales is linked to an increase in eating out following the lifting of coronavirus restrictions.

"Meanwhile, motor fuel sales increased on the month as people ventured out more, but they remained below pre-pandemic levels."

Food store sales slipped by 1.2 per cent for the month, with many shoppers returning further back towards pre-pandemic habits.

It comes as data from Open Table has shown that restaurant reservations picked up last month while credit card providers highlighted a rebound in social spending.

Meanwhile, non-food stores reported a 1 per cent decline in sales volumes, driven partly by department stores, which saw a 3.7 per cent plunge for the month.

Motor fuel sales volumes rose by 1.5 per cent for the month as people continued to increase their amount of travel, although this remains below pre-pandemic levels.

The ONS also highlighted that, in the two weeks to August 22, around 6.5 per cent of retailers said they were unable to get the materials, goods or services they needed due to ongoing supply chain challenges.

Department stores highlighted the biggest difficulties, with 18.2 per cent of these companies stressing issues.

Meanwhile, 22 per cent of food stores said they were able to source products they needed but had to change suppliers or find alternative solutions.

Erin Brookes, managing director at Alvarez & Marsal's European retail and consumer practice, said: "Today's figures should remind retailers to start planning for Christmas, which could be one of the most exciting on record, especially given restrictions last year.

"It will be critical to understand consumer demands and solidify nimble and responsive supply chains, which are only as strong as their weakest link.

"Despite the turbulent times, businesses should be asking themselves how to bolster and diversify their supply chains so that they are not just focusing on immediate issues but are also future-proofing their business against long-term changes in consumer habits."

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