UK retail stores among hardest hit in Europe

A new survey of Eurozone markets has found that UK retailers are suffering a worse hangover from the lockdown months than many of their continental counterparts. According to the study, British retail sales remain significantly below their pre-crisis level.

Earlier in 2020, falling consumer spending power and social distancing measures led to a huge number of British retailers having to close business completely. According to the Confederation of British Industry, by the end of April, 96% of retailers were reporting cash-flow difficulties, with the pandemic having exacerbating long-running trends in the embattled high street.

Now, a new report from real estate consultancy Savills has found that the UK has been slow to rebound from its slump in retail sales, despite lockdown measures lifting. Euro-zone GDP dropped by a post-war record of 12.1% quarter-on-quarter in 2020’s second quarter, reducing the economy to the size it was at fifteen years ago – but the scale of the contraction varied between countries, as did the drop in retail sales, and their subsequent recovery.

The UK saw one of the worst drops, and the weakest rebounds – so while the European retail sector as a whole saw a ‘V curve,’ UK retail sales are still below what they were prior Covid-19.

This is largely thanks to the fact the UK’s retail sector has had one of the most gradual returns of footfall to stores. Having seen footfall decrease by 80% at the worst time of April, UK consumers have been far bolder in their return to stores in France, Germany, Italy and Spain than Britain. With footfall still around 40% below what it was before the lockdown, the UK’s sales results remain muted too.

The likes of Norway, Ireland and Denmark have actually seen a pronounced spike in consumer spending with Covid-19 in apparent retreat, and France, Germany and the Benelux also among the countries where spending is above pre-crisis levels. In stark contrast, the UK’s consumer spending is still beneath that level.

Not all areas of the UK’s retail segment have floundered, of course. British e-commerce sales reached 31.2% of total retail sales according to the ONS, compared to an average of 19.1% for the whole of 2019. While this boom is likely to settle back down to around 24.3%, Savills predicts that this will still mean the shift to e-commerce in the UK has been accelerated by five years.

That could be pushed further if there is indeed a second lockdown, with the UK currently debating whether it should look to curb exponential growth of Covid-19 in the Autumn with more stringent social distancing, or whether the Government sees short-term economic growth as its priority.

Grocery sales were also up annually across all markets. In the UK this saw an 11% spike, alongside 15.2% in Spain, and 10% in the Netherlands over the same period. This is largely attributed to lockdown resulting in all meals being taken in the home, rather than a high proportion being spent in restaurants, cafés and takeaways. Even after the easing of social distancing, this looks set to continue.