U.K. Lockdown Sent Retail Sales Plunging Almost 20% in April

(Bloomberg) -- U.K. retail sales dropped in April by the most in at least a quarter of a century, according to industry figures that outline the impact of the shutdown on stores.

The British Retail Consortium said total sales fell 19.1% in April from a year earlier, the most since its monitor began in 1995. In a further sign of the damage done by the lockdown, a Barclaycard measure of consumer spending fell 36.5% last month.

On the consortium’s like-for-like measure, which excludes temporarily closed stores, sales were up 5.7% in April. But most of that growth came from online shopping, which surged almost 60%.

Online demand was driven by entertainment products and home-related goods, with computing equipment, household gadgets, toys and baby equipment performing strongly, according to the report. Clothing experienced a significant decline.

Figures due later on Wednesday are forecast to show the U.K. economy shrank in the first quarter, reflecting the imposition of virus-related restrictions. The slump is likely to deepen this quarter, and the government is extending aid programs to help support workers and businesses.

All British retailers have been affected by the lockdown. Even grocers and other shops deemed essential that have been allowed to continue operating have had to absorb higher costs as they implement social distancing and other measures.

Under Pressure

Primark, the value clothing chain owned by Associated British Foods Plc, has said the closure of all its shops is costing 650 million pounds ($800 million) of lost revenue a month. Marks & Spencer Group Plc has cut its dividend to preserve cash and weather the crisis. Next Plc reported a 41% plunge in full-price sales in the quarter ended April 25 and said business would remain under pressure for the rest of the year.

Nearly all retailers have withdrawn financial guidance for the year.

The lockdown has been “catastrophic” for retailers, the consultancy group BDO LLP said last week, adding that even the strongest online sales ever wouldn’t be able to offset the impact. Consumer behavior has changed drastically during lockdown, and retailers will need to adapt as they start to reopen, according to Sophie Michael, head of retail and wholesale at BDO.

“With such a significant amount of spend removed, retailers will be focusing on preserving cash, engaging their customers through online channels, and building operational efficiency,” Michael said.

©2020 Bloomberg L.P.