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RETAIL JOBS DOWN 14% IN FIRST QUARTER OF 2020 THE LATEST ELECTRICAL GOODS INDUSTRY NEWS
RETAIL SALES UNDERGO SECOND WORST FALL IN 25 YEARS
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ay 2020 proved to be yet another bleak month for retailers as the temporary closure of non-essential stores continued under Government restrictions, but online retail continued to reap the benefits of the resulting vacuum. According to the BRC-KPMG retail sales monitor, total sales fell by 5.9%, a less drastic decline than April’s 19.1%, but nonetheless the second worst recorded since the monitor began in 1995. Online non-food sales increased by 60.2% against growth of 4.4% in May 2019, with the penetration rate increasing from 31.4% to 61.9% year on year. Helen Dickinson, Chief Executive of the BRC, said many retailers will be anxious to see whether demand returns to high streets when non-essential shops reopen.
“Weak consumer confidence and social distancing rules are likely to hold back sales,” she said, adding: “there are concerns that if Government support is withdrawn too quickly, shops and businesses will not survive.” “Some doors may not reopen at all,” commented Paul Martin, UK Head of Retail at KPMG. “COVID-19 has acted as an accelerant in the shift towards having less of a physical presence, not least due to the obvious need to radically reduce costs for survival. “We’re also witnessing historically high levels of sales transacted online – currently over 60% – and while this will ease as more stores open, consumers have formed new habits that will see the online channel continue to be more prominent going forward.”
UK CONSUMER CONFIDENCE NEARS HISTORIC LOW G
fK’s third COVID-19 flash report containing data gathered between 20th and 26th May showed the UK Consumer Confidence Index decreased by a further two points to -36, just three points shy of the historic low of -39 recorded in July 2008. Joe Staton, GfK Client Strategy Director, said the fall was “against a backdrop of falling house prices, soaring jobless claims, and with no sign of a rapid V-shaped bounce-back,” the only positive in the figures being a 6-point rise in the Major Purchase Index, indicating latent demand among shoppers. “As the lockdown eases it will be interesting to see just how the consumer appetite for spending returns in a world of socially-distanced shopping and the seismic shift to online retailing, alongside worries of a fresh spike in COVID-19 cases as relaxations increase.” In February this year, the consumer confidence index stood at -7. By April it had reached -34. Now, this latest flash report shows it nearing the depths recorded during the financial crisis.
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MAY/JUNE 2020
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etail job numbers dropped by 14% year-on-year in the first quarter of 2020 in what is said to have been a “tumultuous start to the year” for the industry. According to a report from CV-Library, which claims to be the UK’s leading independent job board, the fall was the sixth highest of all the sectors analysed, and a quarter-on-quarter decline of 24.6% is even more grim for the industry. Applications for retail vacancies also fell, down 24.3% on Q1 2019 last year, but pay in the sector increased by 5.8% year-on-year and 3.3% quarter-on-quarter. Lee Biggins, founder and CEO of CV-Library, said: “It really has been a tumultuous start to the year and it’s having a massive impact on retailers and the wider economy. “While measures are being put in place to protect companies and their employees, the reality is that both Brexit and the coronavirus pandemic will have long-lasting effects on the UK labour market. Unemployment rates are set to soar in the coming months and this could be financially devastating for UK professionals.” Biggins added that it is difficult to predict how the labour market will perform in the next quarter, “but sadly, it doesn’t look promising,” he commented.
CORONAVIRUS OBLITERATES HOPES OF IMPROVED RETAIL HEALTH FOR FORESEEABLE FUTURE
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he UK’s retail health worsened considerably in the first quarter of 2020, with the impact of COVID-19, the key driver, extinguishing previous hopes of any recovery. According to the KPMG/Ipsos Retail Think Tank (RTT), retail health fell by 3 points to 71 – a new record low for the index, which is a quantitative and qualitative assessment of demand, margin and cost. An even more seismic drop of 9 index points, taking the RHI score to just 62, is predicted in the second quarter, greater than the fall recorded in the shadow of the 2008/09 financial crisis. “The nation’s lockdown, and its impact on demand in particular, has sealed the fate for many retailers, especially those deemed non-essential,” said the RTT. Paul Martin, RTT co-chair and UK head of retail at KPMG, said: “If looking at total sales in the UK over the first quarter of 2020, nonfood retail was on a -1% trajectory in both January and February. However, from mid-March onwards, the decline was far more severe as anxiety around COVID-19 started to rapidly rise. The lockdown only came into effect on March 23rd, but non-food retail sales fell by anything from 50%–100% thereafter, dependent on whether the retailer in question had any stable online operations or not.” Martin pointed out that the lack of consumer engagement was mirrored by footfall figures during the quarter too. A record decline of 14.2% recorded in February was superseded by a fall of 51.3% in March at stores which remained open. Looking ahead at the prospects in the second quarter, RTT economist Ruth Gregory of Capital Economics, said: “We think that the lockdown implemented to contain the coronavirus will trigger a peak-to-trough fall in GDP of around 25% in the first half of this year, which would dwarf the 6% drop during the 2008/09 financial crisis. Retail sales could fall by as much as 30% in parallel.” “Even when restrictions are lifted – whenever and however that may be – it’s unlikely we’ll see a return to normal by any means,” said Tim Denison, co-chair of the RTT and director of retail intelligence at Ipsos Retail Performance.
