UK retail sales climb back above pre-pandemic levels, but for how long?

Office of National Statistics data shows a rise in retail activity in July, but ending furlough schemes and rising unemployment could cut the recovery short

Article updated: 24 August 2020 11:00am Author: Ian Forrest

  • Retail sales in July recovered above levels seen in February, before the coronavirus pandemic began
  • It’s notable that online sales are still 50% higher than in February despite a 7% fall in July
  • Investors do need to bear in mind that footfall in the high street is still relatively low compared to pre-pandemic levels
  • When the government’s furlough scheme comes to an end, many expect unemployment to increase which could have a knock-on impact on retail sales

Data from the ONS today reported that retail sales in July recovered above levels seen in February, before the coronavirus pandemic began. Sales rose 3.6% in July and are 3% above those recorded in February, which provides some badly needed good news for the retail sector. It also confirmed the data released by the British Retail Consortium last week that overall sales are bouncing back strongly. Within the figures it’s notable that online sales are still 50% higher than in February despite a 7% fall in July. Clothing sales increased by 12% but remain 26% below pre-pandemic levels.

While this is good news for the retail sector and the wider economy, investors do need to bear in mind that footfall in the high street is still relatively low compared to pre-pandemic levels and many retailers are closing stores and laying off staff. Growth in the sector is still driven by online sales and services such as click and collect. Those trends were symbolised recently with Marks and Spencer announcing 7,000 staffing cuts at the same time as its online grocery delivery service through Ocado is due to launch. When the government’s furlough scheme comes to an end, many expect unemployment to increase which could have a knock-on impact on retail sales.


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Ian Forrest portrait photo
Ian Forrest

Investment Research Analyst

Ian’s background in investments, financial journalism and research has seen him advising private investors on equities and helping to manage portfolios. His qualifications include the Certificate in Financial Planning and the Chartered Institute for Securities & Investment’s Investment Advice Diploma.

See what else we have to say