January opened 2021 with the highest individual monthly growth since January 2008, reporting total market growth at 74.4% YoY. The extraordinary growth is due to a combination of a smaller drop off from December and relatively poor January in 2020. Typically, the month-on-month fall from December to January is around 40% (from 2019 to 2020 it was -37%), whereas in 2021 that figure was only 20%. This means the volume of spend in January was far higher than in previous years. Additionally, the growth rates reported in January 2020 were low at just 6%. At the time of reporting January 2020 results, the market was acknowledged to be in a period of slow growth. Consequently, we have a situation of increased January spend in 2021 being compared to a lacklustre period 12 months prior- hence the stunning 74.4%
A highlight of January trading was the electricals sector, reporting 206% year-on-year growth which is the highest result on record. Twelve months ago, Electricals reported exactly 0% growth in January 2020, with a month on month decline of 48%. Compare that to a month-on-month decline of 27% for 2021 and the Electricals sector represents a perfect example of how the market scenario combination mentioned above is driving sales to record highs in January this year.
Some of January’s growth may also be due to the partial closure of hospitality during a month that is popular for winter holidays (January is one of the most common times for skiing holiday payments to be made for upcoming half terms vacations). The diversion of holiday spend has been present over the last 10 months of retail performance, and January is certainly a good example of how additional spend from leisure has likely transferred into retail.
It is worth noting that in a short period of time, there will be annualised data for ‘shopping during COVID’. The initial market reaction to the COVID pandemic was first felt in March 2020. Since then, all the Year-on-year figures have been reporting against ‘non-covid’ trading periods. When March 2021 figures are reported it will be the first time for any annual comparison and show a closer ‘like for like’ result. Expectations for what accounts as a ‘good performance’ will need to be readjusted in an annualised covid world.
IMRG have purposely not issued a forecast for 2021 due to the unpredictable nature of the upcoming 12 months. There are too many unknown variables surrounding store closures, the vaccine rollout and diverted spend on holidays and leisure activity to reliably predict how the market will react this year. We believe any forecast provided would simply be unusable given the uncertainty of the wider economic climate.