Cost of living crisis fails to slow down shoppers after successful January for retailers
Cost of living crisis fails to slow down shoppers after successful January for retailers
- January retail sales record eleventh month of consecutive growth
- Total like-for-like sales up by over 51% compared to January 2021
- Online sales drop slightly but from a base of more than five times pre-Covid average
The retail sector has started 2022 by recording its eleventh consecutive month of like-for-like sales despite concerns that the rising cost of living may impact consumer demand, new figures by accountancy and business advisory firm BDO LLP reveal.
According to BDO’s High Street Sales Tracker (HSST), total like-for-like sales, combined in-store and online, increased by +51.9% in January but from a base of -10.0% for the equivalent month in 2021 when the country was in full lockdown.
Total non-store like-for-like sales decreased by -2.7%, which is only the second time that online sales have fallen since 2010, when BDO began recording for that channel. However, this is from an extremely high base of +132.8% in January 2021, which shows that online channels are largely maintaining the substantial growth in proportion of retail revenues stemming from when the UK was in lockdown in early 2021. For this reason, despite the marginal decline, online sales will have provided a significant boost this month.
Total like-for-like sales saw substantial increases across all categories compared to January 2021. Despite slightly slower growth in the first week of the month, subsequent weeks saw like-for-like sales grow by more than 60% compared to weeks impacted by shop closures last year. In the final week of January, when all COVID-19 restrictions were lifted in England, total like-for-like sales grew by +62.71%, from a base in January 2021 of -9.42%.
Sector Results
Fashion saw the biggest growth, with total like-for-like sales increasing by +74.2% for the month, from a base of -12.1% for the same time last year. The sector has maintained consistently strong growth throughout the autumn and winter months, and January marked its eleventh consecutive month of growth.
Total like-for-like sales in the lifestyle sector increased by +46.7% in January, from a base of -16.7% for the equivalent month last year. However, the sector saw a significant fall in non-store like-for-like sales having recorded substantial increases during lockdown last year.
Homeware total like-for-like sales rose by +26.2% in January, from a base of +6.7% in the same month last year. This is the twenty-first consecutive month of positive like-for-like homeware sales, despite non-store like-for-like sales declining in January.
Sophie Michael, Head of Retail and Wholesale at BDO LLP, said:
“With the cost of living set to continue to rise, many retailers may have expected a rocky start to 2022, particularly as they largely avoided significant discounts and promotions in January. Consumers, though, have defied expectations by continuing to spend heavily in discretionary categories. However, many will be asking how much longer this level of consumer spend can be sustained.
“In recent months there have been reports that levels of consumer debt and usage of “buy now pay later” platforms have increased significantly. Retailers may have benefitted from this in January, but it is not sustainable, especially as consumers prepare for increases in energy prices, National Insurance and inflation.
“We may continue to see strong like-for-like sales in the early months of 2022 but as the figures are bench-marked against months in 2021 when the country was in full lockdown, such strong results may not reflect the actual experience on the high street. Given the expected stretch on household finances, it’s unlikely that this growth will continue throughout 2022. Within this context, retailers will need to be flexible, managing their working capital carefully to adjust to fluctuating consumer demand.”
Notes to editors
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