The IMF may have given the UK economy a sick (man of Europe?) note this week, but when it comes to ecommerce, things are looking reasonably healthy. Data from GfK and Wunderkind both point to March’s figures showing consumer confidence up two points on this time last year and with digital revenues in the UK up 36.6%.
Meanwhile, the Adobe Digital Economy Index finds that UK consumers spent 29.9% more online in March 2023 than they did in March 2020 – the month that saw the start of the pandemic lockdown.
The wider retail space also saw a boost in March, with the British Retail Consortium and KPMGshowing overall sales up 5% on February, which itself was 5.2% up on the previous month.
The improvement in online and offline retail comes largely through the impact of Mothers’ Day and comes despite a raft of industrial action and the wettest March in 42 years. Sales of fashion, gifts and DIY were all up.
Much of this can be explained by the impending Easter weekend, the Coronation Bank Holiday and industrial action seeing more people shopping online with transport links suspended.
It is also likely that they are spending more on less, with rampant inflation forcing up prices dramatically compared to this time last year.
Against this backdrop, the rise in consumer confidence is more of a mystery. While the prospect of time off , and end to the endless rain and big-ticket events such as the crowning of King Charles III go some way to explaining it, the wider economic news looks so grim that it is hard to see why people are so chipper?
One explanation could be that, with inflation still high, the energy price cap coming to an end in April and phone bills and other costs set to rise across the Spring, shoppers saw March as a last bid to spend. Economists at KPMG are already warning that consumers are set to tighten their belts considerably from April onwards – probably until we see a significant fall in interest rates.
So what is the retail industry doing about this? The recent signing up of the UK to the CPTPP trans-Pacific 11 country trade pack offers little immediate comfort. While the deal is heralded as the largest post-Brexit trade deal yet done, many are sceptical of who quickly UK firms are likely to be at accessing a market that is between 6000 and 12,000 miles away. To say there are logistical challenges puts it mildly.
POTUS Biden’s visit to Northern Ireland and the Irish Republic this week also became an opportunity to pour cold water on the prospect of a trade deal with the US market.
Instead, retailers are having to look at how to make efficiency gains through using AI platforms to do everything from plan logistics to enhance search and cut bounce rates to create content and to beat fraud. Heck, even Alibaba has got in on the act, launching its own rival to ChatGPT, Tongyi Qianwen, which translates as “seeking an answer by asking a thousand questions”, and which will be integrated across the business in “the near future”.
Similarly, retailers and brands are also seeking to leverage other channels like never before, with a renewed focus on social commerce.
Leading Asian social selling site SHOPLINE certainly sees the potential in expanding the UK’s use of shoppable social, opening its European HQ in London.
Exploring these new channels, particularly with AI tools, is widely seen as not only on trend, but also an efficient way to revamp business practices. While growing through more sales is likely to be hit by a bleak April, perhaps the rise of the machines is just what ecommerce needs to see us through to the sunny uplands?
