Over the course of Black Friday week, the perception was that more sales were taking place online, while fewer people headed to the high street. Official figures out this week seem to confirm that move, with news of online sales growth of almost a quarter in November.
The amount spent online rose by 24.9% during November, according to the Office for National Statistics’ (ONS) Retail Sales Index, compared to the same month last year, and by 3% compared with the previous month, October 2016.
At the same time, shoppers spent 5.9% more across the retail industry – which mostly takes place in shops – compared to last year, and 0.5% compared to the previous month. The increase came as shop prices went up for the first time in November for the first time since June 2014, by 0.1%.
In total, shoppers spent £34.2bn in the retail industry – or £8.5bn a week, while online spending reached £1.1bn a week. It seems that ecommerce grew its share of sales, while also contributing to overall growth. Online sales accounted for 15.8% of retail spending, compared to 13.3% in November 2015.
“Black Friday clearly swayed shoppers to log-on instead of hitting the high street, with e-tills ringing to the tune of a 24.9% year-on-year increase in the amount spent online,” said Paul Martin, UK head of retail at KPMG [IRDX VKPM]. “Clearly the shopping extravaganza is continuing to win favour with Brits, however it’s worth remembering that these figures only just capture Black Friday and not Cyber Monday – which will be included in next month’s instalment. They also don’t account for any returns shoppers might make, which could be higher than normal when impulse purchases require a second thought.”
Online food sales grew by 23.8%, or 5.2% of all retailing. The fastest growth came in household goods stores, where ecommerce sales grew by 33.7%, and accounted for 11.6% of all sales in the sector. Textile, clothing and footwear stores grew by 14.8%, to account for 15.1% of sales, while department store sales grew by 14.2% to account for 13.5% of all sales.
Martin said: “Household goods stores selling furniture, lighting and other appliances continued to perform particularly well. In fact, sales of electrical appliances shot up by as much as 19.1% compared to October, so promotions in this category clearly struck a chord with shoppers.
“Further reinforcing the direction of travel in relation to retail pricing, November noted the first year-on-year increase in average store prices since June 2014, albeit the largest increase came from petrol stations. Black Friday may well have boosted sales in November, but retailers will be hoping that the growth is prolonged into December.”
The ONS also saw a link between the increased sales and Black Friday discounts. Kate Davies, ONS senior statistician, said: “Retailers saw continued growth in the run up to Christmas. Department stores and household goods stores had a particularly strong month, especially in sales of electronic goods, boosted by ‘Black Friday’ deals.
“Annual growth in fuel sales, however, was at its lowest level for almost two years as prices increased at the fastest rate since 2011.”
At the same time, performance marketing specialist Webgains said that it saw Black Friday sales at more than 2,000 clients including Nike, Mothercare, Feelunique and Samsung, grow by 28.13%, compared to the same time last year – and warned that some brands could see a dip in Boxing Day sales as a result.
Richard Dennys, chief executive of Webgains said: “UK shoppers bought into Black Friday promotions more than ever this year, but brands must do all they can do ensure this isn’t at the expense of a profitable Christmas and Boxing Day period.
“Whilst the high street has been buoyed by overseas shoppers capitalising on the devalued pound, online brands must up their Boxing Day efforts by strategically placing promotions across the most effective media.”
Commenting on the ONS figures, Heather Barson, director for retail and hospitality, UK and Ireland at Fujitsu, said: “The latest ONS figures reveal a strong and thriving UK retail sector even during times of economic uncertainty. The Black Friday and Cyber Monday period clearly provided a significant boost, with sales up 5.9% compared to last year. The results also demonstrate how shoppers online habits are evolving, with online sales up 24.9%, compared to last November, and is a clear indicator of consumers becoming ever more at home with using digital channels to shop.
“This rise in popularity of online shopping shouldn’t be viewed as a threat to the high street however. What bricks and mortar retailers ought to be doing is embracing it as an opportunity to reinvent themselves. British shoppers still value high street stores, with 63% saying so in a recent survey, emphasising that touch and feel provides an important experience for consumers. However, the multitude of retail options, from online and social to mobile and in-store, have led to consumers becoming increasingly intolerant of retailers who don’t have a strong omnichannel strategy in place. It is essential therefore to have seamlessly integrated channels that flow from the shop floor, to the back end systems through to the online store. This will enable customers to move freely from one to the other during their shopping experience and shop the way they wish in this new digital age.”
Mentioned in this piece…
KPMG in the UK has over 10,000 partners and staff working in 22 offices and is part of a strong global network of member firms. Our vision is simple – to turn knowledge into value for the benefit of our clients, people and our capital markets. Our innovative spirit inspires what we do and how we do it, providing valuable benefits for clients, employees and stakeholders. Constantly striving to be better lies at the heart of what makes us different. (more…)