January retail sales echo depressed state of the nation following lacklustre Christmas and no clear exit plan, says RSM

Britain’s January retail sales decreased by 8.2 per cent in volume when compared with December 2020 and fell by 4.9 per cent in comparison to the previous three months. Strong declines were seen in both clothing stores and fuel. This fell during a period when all non-essential retail stores were closed in England from 6 January with measures due for review in late February.

Despite heavy discounting during January sales promotions, clothing stores were the main driver towards the monthly decrease with declines of 35.6 per cent in the amount spent and 34.7 per cent in the quantity bought. Online sales continue to boom and saw a record performance in January reaching 35.2 per cent in proportion of sales overall compared with 29.6 per cent in December.

Jacqui Baker, Retail Director at RSM, said: ‘In the wake of a depressing Christmas for many, not even the January sales could release some of the £125bn of savings the Bank of England indicates the nation has built up since 2020.

‘Compounding the impact of the pandemic the dire effects of Brexit also moved into view in January. Retailers were squeezed even further with supply chains thrown into disarray by changes to the rules of origin, duty treatment on returns and onerous paperwork. The knock-on effect rang through the market with many including John Lewis forced to suspend sales into Northern Ireland due to the all-contentious border issue impacting sales further.

‘Without intervention from the Chancellor on 3 March the eagerly awaited release of pent up savings could be crushed and high streets unrecognisable come spring. Timed with the likely reopening of society and the economy, crucial measures supporting the retail industry including the business rates holiday and rent moratorium are due to end come April. It will be worth the Chancellor considering the knock-on effect of empty high streets retail units on wider consumer confidence should he choose to let this support fall away. Not to mention the impact on the high street eco-system including pub and dining venues.