Consumers starting their Christmas shopping earlier than usual amid concern over supply chain shortages and rising prices helped to drive a recovery in UK retail sales last month, industry figures show.
The British Retail Consortium said total sales were up 1.3% in October from the same month a year ago, and up 6.3% from the same month in 2019, before Covid-19 tipped the UK into the worst recession for 300 years.
In September, the Office for National Statistics recorded its fifth month of contracting sales volumes, the longest slump to hit the sector since 1996.
Faced with gaps on shelves and lengthy delivery times amid the worst supply chain disruption since the 1970s, consumers rushed to buy toys and presents to avoid disruption closer to the festive period. The retail rally comes despite rising pressure on household budgets as soaring energy bills push up inflation and eat into families’ spending power.
According to the BRC, clothing and footwear sales performed well, as Halloween helped to boost sales of children’s costumes and chocolates. However, global supply chain disruption continued to hold back sales of furniture and electrical items. Food shops also reported weak growth, with spending dented by the gradual return of consumers to pubs and restaurants after the reopening of the hospitality sector.
Separate figures from Barclaycard showed that overall spending on credit cards grew by 14.2% in October from a year earlier, with particularly strong growth in spending on travel, digital entertainment and subscription services.
According to a survey of 2,000 consumers for the credit card provider, more than a third said they were so concerned about shortages on the shelves that they adjusted their spending habits this year. More than half of this group said they had brought forward their spending, including on children’s toys and gifts.
Colder weather led to a 127% jump in online takeaway spending from a year earlier, according to Barclaycard, while the release of new series and box sets such as Squid Game and Succession fuelled growth in demand for online streaming services.
Spending on cinema tickets grew on an annual basis in October for the first time since the pandemic started, with sales helped by the release of the new James Bond film, No Time to Die.
Spending on flights and overseas holidays also rose by the most since the pandemic began, as travel agents and airlines benefited from rising sales after the government slashed the number of countries on the Covid “red list” of destinations.
Helen Dickinson, chief executive of the BRC, said that demand was getting “back on track” before the pivotal Christmas shopping period, with retailers benefiting from social calendars filling up again after pandemic restrictions were eased.
Dickinson said retailers would do everything they could to offer choice and availability throughout the Christmas period, prioritising the food and festive goods needed to celebrate. “However, there are challenges ahead, with higher prices on the horizon compounded by the many increasing costs faced by consumers such as higher energy bills and rising National Insurance.”
It comes after analysis from YouGov and the Centre for Economics and Business Research showed consumer confidence dropped to the lowest level since March, amid a worsening outlook as the government cuts benefits and increases taxes and inflation set to rise inflation this winter.
The YouGov/CEBR household finance index, which is compiled from a survey of more than 6,000 individuals on the outlook for their finances over next 12 months, slumped by 9.7 points to 81.1 in October, compared with a month earlier. A score of 100 is neutral; anything above that value indicates optimism, while lower values indicate pessimism.
Paul Martin, UK head of retail at the accountancy firm KPMG, said that although the squeeze on household finances was yet to translate into weaker retail sales, risks for retailers still remained.
“With rising costs putting a strain on most retailers, they will be placing all hopes that demand remains strong as consumers plan for a bumper Christmas, shopping early for those much wanted gifts and spending more than last year, when Christmas gatherings were cancelled. The main concern is now how trade will develop post-Christmas into 2022,” he said.
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