A couple of weeks ago, the Office for National Statistics produced the monthly retail sales figures for Great Britain for January 2021.  This is the first full month of data since lockdown was reintroduced before and around Christmas.

The press headlines in some cases were predictably apocalyptic, and highly unenlightening.  There is no doubt that parts of retailing are really struggling, but others are not, reflecting the current changed reality of consumer behaviour.  As I have written before, the headlines irritate me because they ignore the context to a major degree.  In a lockdown where some shops can not open, surely you expect retail sales to be down, and by quite a lot.  Indeed one could argue given the state of the economy and personal finances for many, they have been more resilient than anticipated (see first figure above).

None of that though can mask the pain and the problems for retailers (and especially their employees) forced to be closed and likely to be closed for some time yet.

We can see the impact of this in these ONS figures.  Non-food stores saw sales almost a quarter down between January and the previous month (December including Christmas).  The impact is felt across the non-food sectors but the data suggests it was not as extreme as in the first lockdown last April.  This is ascribed to stronger online and click and collect provision, as capacity has been built and learning implemented in the last 10 months.

Food retailing continued to do well, growing in comparison to December.  Some of this remains hospitality and eating out diversion. Supermarkets also gained clothing sales.

The switch to online is also notable in the figure above.  And, as the figure below shows, the proportion of retail sales online hit a record 35.2% in January 2021.  The figure clearly shows the switch at the start of the pandemic into online, and the way in which food retailing reacted (now at a record 12.2% in food as well).

The questions arising from these data are profound for retailing:

• Does the online food penetration pattern imply a sustained switch of behaviours? Capacity has been built and users are used to systems, so is this level here to say or likely to grow? Or if it gets unused what will that say for the future of online food retailing?

• Linked to this, does routine food sales via this channel imply that better local and convenience opportunities will also be sustained?  Or will these be hit more as hospitality etc. opens up?

• The fluctuations of the non-food online penetration (linked to lockdowns) implies a more necessity driven behaviour, so does this suggest that as stores open up, so sales patterns will revert to physical stores, and online penetration here will fall?

• And overall, is online at 35.2% where this will end up, or will as before in the pandemic the penetration drop back a bit?

This will obviously unfold as we come out of lockdown, and if we can sustain the opening up of shops, then I think we will see a renaissance of physical retailing. The questions above are a little skewed to the macro and the larger retailers perhaps, and there is an interesting undercurrent of independent and local shop openings and attraction that will need to be considered further. We have all missed being out and about and socialising, and I suspect many will want to make up for lost time in their local and perhaps other centres, and to see something different to their current online and restricted shop offers.