UK retail sales dipped for the fourth consecutive month in August by 0.9% with supply chain issues across the board

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UK retail sales defied expectations of a rise in August and dropped by 0.9 per cent, new figures show. 

The Office for National Statistics (ONS) said retail sales volumes dropped last month, following a 2.8 per cent fall in July. 

The consecutive dips came as a surprise to analysts, who had forecast a 0.7 per cent increase for August. It represents the first time since 1996 that retail sales have dropped for four months in a row.

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Despite the gloomy outlook, retail sales volumes remain 4.6 per cent ahead of pre-pandemic levels.  

Commenting on the newly-released figures, Jonathan Athow, ONS deputy national statistician for economic statistics, said: ‘Sales fell again in August, though not nearly as much as in July, and, overall, remained above their pre-pandemic level.

‘Other data suggest that the drop in food stores’ sales is linked to an increase in eating out following the lifting of coronavirus restrictions.

‘Meanwhile, motor fuel sales increased on the month as people ventured out more, but they remained below pre-pandemic levels.’

Looking at various sectors, food store sales slipped by 1.2 per cent for the month, with many shoppers returning further back towards pre-pandemic habits.

It comes as data from Open Table has shown that restaurant reservations picked up last month while credit card providers highlighted a rebound in social spending.

Meanwhile, non-food stores reported a 1 per cent decline in sales volumes, driven partly by department stores, which saw a 3.7 per cent plunge for the month.

Motor fuel sales volumes rose by 1.5 per cent for the month as people continued to increase their amount of travel, although this remains below pre-pandemic levels.

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The ONS also highlighted that, in the two weeks to 22 August, around 6.5 per cent of retailers said they were unable to get the materials, goods or services they needed due to ongoing supply chain challenges.

Department stores suffered the most with 18.3 per cent of these companies stressing issues, followed by clothing stores at 11.1 per cent. 

Another 8.9 per cent could get what they needed, but had to change suppliers or find alternative solutions in order to do so. 

Meanwhile, 22 per cent of food stores reported the same issue.

Sarah Coles, a personal finance analyst at Hargreaves Lansdown, said that these shortages were key in driving the downward trend in retail across the board. 

When it came to shopping habits, the proportion of retail sales taking place online rose to 27.1 per cent – compared to 19.7 per cent before the pandemic

Looking at Erin Brookes, managing director at Alvarez & Marsal’s European retail and consumer practice, said: ‘Today’s figures should remind retailers to start planning for Christmas, which could be one of the most exciting on record, especially given restrictions last year.

‘It will be critical to understand consumer demands and solidify nimble and responsive supply chains, which are only as strong as their weakest link.

‘Despite the turbulent times, businesses should be asking themselves how to bolster and diversify their supply chains so that they are not just focusing on immediate issues but are also future-proofing their business against long-term changes in consumer habits.’    

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