Early Christmas shopping and stockpiling on food and other items boosted UK retail sales in October, but new coronavirus restrictions resulted in a sharp drop in spending in the hospitality sector, according to industry data.
Retail sales were up 4.9 per cent in October compared with the same month last year — the fifth consecutive month of expansion, according to figures compiled by advisory services firm KPMG and the British Retail Consortium, an industry body.
Helen Dickinson, BRC’s chief executive, said: “October saw another month of strong sales growth, with food, gifts and loungewear high on people’s shopping lists.” She added that tightening coronavirus restrictions and the prospect of an England-wide lockdown “prompted customers to stock up on home comforts and food supplies”.
Despite the month’s strong retail sales, which were based on a solid performance of both food and non-food items, high street retailers face major challenges as spending moves online.
Online non-food sales in October increased 39 per cent compared with a year earlier. The rise brought the share of online non-food spending to more than 42 per cent, 11 percentage points higher than last year.
“Online sales remain high and are set to grow further during Black Friday and lockdown,” said Don Williams, retail partner at KPMG. He cautioned that “not all retailers are in a position to take advantage of this shift in customer behaviour, which has been accelerated by circumstance and for many is now both choice and habit”.
The strong retail figures are supported by data from Barclaycard, which handles nearly half of UK credit and debit card transactions and showed that spending in supermarkets was up 14 per cent compared with the same time last year.
One in three people in the UK admitted they were stockpiling essentials in preparation for potential shortages, according to a consumer survey run by Barclaycard in the three days to October 26.
Supermarkets also experienced a sharp shift to online shopping, with internet spending doubling compared with October last year.
The latest restrictions also prompted people to spend more on takeaway meals, which were up at an annual rate of 18 per cent, and on digital subscriptions, such Netflix and Amazon Prime video, which were 32 per cent higher, according to the payments company.
“As we enter another period of lockdown in England and further restrictions across the UK, this stay-at-home mentality is likely to persist, as is the popularity of takeaways and digital subscriptions — helped along by the colder weather and darker evenings,” said Raheel Ahmed, head of consumer products at Barclays.
However, the company’s data showed that overall consumer spending in the UK was 0.1 per cent lower than in October 2019, dragged down by sectors affected by coronavirus restrictions.
UK consumers spent 33 per cent less in restaurants in October than in the same month last year, and even less than in September, when spending was down 19 per cent from a year earlier.
The contraction was even sharper for hotels and other accommodation, with spending in October down by an annual rate of 37 per cent, 18 percentage points lower than in September.