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Wednesday, October 20, 2021

Retail sales fall as more people dine out


Retail sales in the UK fell for the fourth month in a row in August, but people spent more time eating and drinking in bars and restaurants.

Sales fell by 0.9% in August, the Office for National Statistics (ONS) said, following a 2.8% fall in July.

Food store sales fell by 1.2 percent, but the ONS attributed this to the removal of restrictions on hospitality, which resulted in more people eating out.

According to analysts, sales have been hampered by labour shortages and disruptions in the supply chain.

Personal finance analyst Sarah Coles at Hargreaves Lansdown said shoppers and retailers were “stymied by shortages in August,” but people “rediscovered our passion for a big night out.”

“Keeping the shelves full was a real battle, especially for department stores,” she explained, “which is one reason we spent less in these stores in August.”

“Supermarkets had to fight to keep supply chains flowing, but their size meant they were able to find alternative suppliers so we could keep filling our trolleys.”

According to the ONS, the share of online sales increased to 27.7 percent in August from 27.1 percent in July, a significant increase from the 19.7 percent share seen in February 2020 prior to the pandemic.

According to Jonathan Athow, the ONS’s deputy national statistician for economic statistics, the drop in August sales was “not nearly as severe as in July,” and sales remained above pre-pandemic levels overall.

“Other data indicate that the drop in food store sales is related to an increase in eating out following the lifting of coronavirus restrictions,” he said.

According to the ONS, a survey of retail supply chains found that 6.5 percent of all retail businesses were unable to get the materials, goods, or services they required from within the UK in the previous two weeks.

Clothing stores were the most affected by disruption (18.2 percent), followed by department stores (11.1 percent ).

The shortage of lorry drivers has strained supply chains, causing many businesses to face product delivery delays.

The shortage of truck drivers has been a long-standing issue, but the coronavirus pandemic, Brexit, and tax changes have exacerbated the situation in recent months.

Earlier this week, Ocado became the latest supermarket to announce it was offering perks to lorry drivers, after it said higher wages and sign-on bonuses would cost the online supermarket up to £5m.

Accenture UKI’s head of retail, Lynda Petherick, said labour shortages and supply chain disruption had weighed heavily on the sector, which was “characterised by images of bare shop shelves and delayed deliveries.”

“Retailers will already be concerned as we enter the Golden Quarter because the horse may have bolted for businesses that haven’t already taken steps to secure their supply chains,” she added.

“Order fulfilment and stock availability will be difficult, and many brands may find themselves short-staffed during this busy period. Consumers may be forced to get creative this Christmas if retailers are unable to meet their needs without meticulous planning.”

According to Martin Beck, senior economic adviser at EY, the drop in sales was unexpected “given that both footfall and debit and credit card spending had improved” in August.

“The fact that sales have continued to fall is likely to reflect the continued normalisation of spending patterns, with retail demand being negatively affected in the face of greater opportunities for social consumption,” he said.

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