Apparel & Shoe Sales Led the UK’s Retail Rebound in January

Following a disappointing holiday sales season, U.K. retail sales were back on the rise in January.

According to a report released today by the Office of National Statistics (ONS), the volume of goods sold in Britain rose by 0.9% in January, compared with a 0.8% contraction over the previous three-month period from October 2019 through December 2019. This marked the largest monthly rise since March 2019 and was better than analyst bets of a 0.7% improvement. Spending also rose in January, increasing by 2.1% after a 0.5% decline in the last quarter of 2019.

ONS reported positive gains in the quantity of goods sold across all retail sectors, except household goods and fuels. Sales in those categories declined by 1.1% and 5.7%, respectively, in January, compared to December. The largest increase was recorded in the clothing and footwear sector, with sales volume up 3.9% in January compared to December.

British retailers experienced a generally sluggish 2019, marked by store closures and job cuts. According to data from the British Retail Consortium, 2019 sales dropped by about 0.1%, the first annual sales decline since 1995. Store closures for the year climbed to 16,073, up from 14,583 in 2018. And more than 140,000 jobs were shed — marking the highest rate of job cuts in 25 years and a 20% increase year over year.

The January rebound follows the Conservative Party’s electoral victory in December, when Prime Minister Boris Johnson’s party claimed 76 seats. Johnson had made Brexit a priority, and the Conservative victory had a positive effect on financial markets, as analysts predicted greater clarity regarding how U.K. businesses will be impacted by the split from the European Union.

Despite a positive report for January, the U.K.’s Centre for Retail Research cautions that more brick-and-mortar job cuts and store closings could be on the way for the country this year. The center cites high fixed costs and taxation rates, heavy price competition and growth of the e-commerce sector as factors that could lead to more struggles in the retail sector.

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