UK Retail Industry Outlook | Retail Economics

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UK Retail Industry Outlook Report summary

June 2021

Period covered: Q2 2021

Note: This report summary is one or two months behind the current month as standard reporting practice. The content is indicative only and incomplete with certain data undisclosed. Become a member to access this data or take out a free 30 day membership trial now.

Labour market

Unemployment, employment and job vacancies continue to recover as restrictions ease, but the recovery is uneven.
Payroll estimates for the quarter to May 2021 show the number of payroll employees increased for a sixth consecutive month, rising by 141,000 employees, or 0.5% on last year (HMRC).
However, it remains some 553,000 below pre-pandemic levels – with those aged under 25 years, working in hospitality, and living in London most impacted.

Disposable income

Annual growth in average employee increased for a ninth consecutive month in April. Total pay growth rose at the fastest rate in more than 20 years at 8.4% in the month.
However, this is being driven in part by compositional effects from a fall in the number and proportion of lower-paid jobs. The ONS estimates the net impact of recent job losses accounts for approximately 1.5% of average pay growth.

Confidence

Consumer confidence hit a milestone in May, with GfK’s index bouncing back to pre-lockdown levels at -9.
The continued roll out of the UK’s vaccination programme has boosted confidence as the economy had been reopening in-line with the road map.

Propensity to Spend

Consumers feel more confident about making big ticket purchases compared to last year. GfK’s major purchases index rose by five points to -7 in May 2021, 40 points higher than it was a year earlier. And consumers are generally in a stronger financial position.
Almost half (45%) of consumers have put more money into savings since the pandemic, supported by households simply being unable to spend as they normally would.
The housing market has been resilient to the crisis. Unlike the previous 2007-08 financial crisis, unprecedented levels of government intervention have supported homeowners.

Return to stores

As shops and indoor hospitality reopens from late spring, retailers had hoped for a bounce back in footfall. But increasing shopper numbers are likely to lag the easing of restrictions as consumers remain cautious.
Anxieties have heightened from the Covid-19 Delta variant, with Government guidance to avoid certain locations.

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