One question we are regularly asked is whether the retail sector is ‘back to normal’ following the pandemic. There is little analysis on the topic, and the impact of inflation makes answering this question even more of a challenge. 

To get a snapshot of retailer performance across this period, we have calculated year-on-year (YOY) performance across circa 25 categories encompassing thousands of store level (not online) data points across Savills managed retail and leisure sites from January 2018 to September 2023*. Through this analysis, we found that, on average, between January 2019 and September 2023 (when compared with 2018), retail sales are down 13 per cent YOY when adjusted for inflation. However, for the 2023 calendar year, sales on average are only 4 per cent behind 2018; in fact April 2023 saw growth of 2 per-cent versus 2018 in real terms. 

To put this into context, according to MRI Online, UK footfall is down 11.5 per cent year-to-date versus 2019. So, despite footfall being behind pre-pandemic levels, conversion is actually up. 

When we look at performance at a category level, we see a number in positive territory.

The ‘sporting goods’ category is up 0.7 per-cent YOY on average across this period. The success of this category emphasises the growth in health and wellbeing among consumers while also encompassing the ‘Athleisure’ fashion category. Year-to-date this category is up an even-more-impressive 13 per-cent on average versus 2018. This has been perhaps the most consistent retail category of the last five years. 

Jewellery has also seen a rise of 3 per-cent over this period versus 2018. This is likely due to the surge in luxury purchases which occurred during the pandemic as a result of increased disposable income. In addition, the recent era of low savings rates and high inflation has led to this category becoming a ‘flight to safety’. 2023 growth versus 2018 is even higher at 5 per cent. 

However, the best performing category – up 9.2 per cent on average between 2019 and 2023 versus 2018 when adjusted for inflation – is confectionery. Earlier this year, we posited the theory that chocolate was the new lipstick. This was in reference to the so-called ‘lipstick effect’, in which consumers purchase low-value, indulgent items during inflationary times to make themselves feel better. Year-to-date, confectionery is up an incredible 28 per cent on average versus 2018.

At the bottom end of the growth scale, travel has seen the worst performance, down 33 per cent on average versus 2018 over this period. This is perhaps unsurprising given the global restrictions on travel for an extended period in 2020 and 2021. However, 2023 has seen an improvement, with travel still down compared to pre-pandemic levels, but up 12 per cent on average in comparison to the previous year. Other lower performing categories included stationery and music, books and games, which have been negatively impacted by a shift to online purchasing within these categories. 

So has retail recovered from the pandemic? Recent signs suggest we have and, in certain categories, we are way above pre-pandemic figures.

For each month being compared, we have stripped out headline (CPI) inflation and compared the net figure with the corresponding month in 2018 (ie January 2018 vs Jan 2019, Jan 2020, Jan 2021 etc).

Further information

Contact Stephen Toal

Is the ‘lipstick effect’ making a comeback in retail?