Consumer demand rebounds but retail confidence still volatile

UK retail sales rose back above the levels seen before the COVID-19 pandemic during July according to figures from the Office of National Statistics. Retail sales volumes were up 3% on February’s figures, with food and online retailing higher than before the pandemic, and non-food and fuel below pre-pandemic levels.

Don Williams, Retail Partner at KPMG, said: “The latest retail sales and consumer confidence figures continue to point to the release of pent up demand post lockdown. This is no doubt welcome news for those capturing the uptick, but consumer confidence remains extremely volatile.”

“The pandemic’s grasp on our daily lives in the longer-term is only just starting to become apparent, whether it be holiday plans thrown in the air, key purchases put on hold or job security questioned as the furlough scheme starts to unwind.”

He added that the government’s ‘eat out to help out’ scheme may have encouraged consumers to return to restaurants this month, boosting footfall on our high streets and in town centres too, but believes that the existence of the scheme alone should signify the magnitude of the challenge facing all consumer businesses.

“The fortunes of retail remain up in the air, as has been evident in the mixed bag of positive and negative corporate updates in recent months and weeks. Indeed, the ONS retail sales figures themselves are positive overall, but certain categories – especially fashion – continue to suffer.

“July may have seen online activity fall slightly but there is no question that there has been a locked-in step up in online sales adoption by customers. Great execution in this channel will continue to be key for success going forwards and continued investment and/or partnership in this area will be a key consideration for retailers.”

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