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IREU Top500 The Customer Report: 2018

IREU Top500 The Customer Report: 2018

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Online drives January growth in retail sales: new figures

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Online drives January growth in retail sales: new figures
Online drives January growth in retail sales: new figures

Online retailing helped drive overall growth in UK sales figures in January, figures out this morning from the Office for National Statistics found. The figures showed sales moving further online, with growth in the proportion of UK retail sales now transacted over the internet.

The ONS’s Retail Sales Bulletin for January 2012, out today, found non-store retailing, which is primarily made up of internet sales, grew by 13.3% last month, compared to last January. Internet sales were put at £640.4m a week, some 11.9% of all retail sales, excluding fuel. That compares with an average weekly online spend of £462.1m in January 2011, equivalent to 8.9% of retail sales.

Overall UK retail sales grew by 2% in volume last month, compared to the same time last year, and by 4.4% in value. The ONS said: “Sales volumes were driven primarily by non-store retailing, other stores and predominantly food stores.”

Kentaro Hyakuno, chief executive of Rakuten’s Play.com, said the figures showed how much commerce had changed, highlighting "the growth of ‘non-store’ retailing and the continued decline of the high street."

He added: "Many believe that bricks and mortar will continue to steadily lose ground to their digital competitors in the coming years, but this doesn’t have to be the case. Ecommerce can be used to complement and encourage offline sales as well as loyalty. Rather than facing a simple ‘death of the high street’ scenario, retailers are in fact in a process of acclimatising to a new connected retail environment.

“Today’s shopper is a complex beast. They engage with brands in a variety of different ways when coming to a decision about what to buy and where to buy it. The offline and online worlds continue to merge and consumers are turning to an ever wider variety of social and commercial information sources before making a purchase. While many view the connected customer as more valuable, the bricks and mortar experience is something many consumers still value.

"The key for retailers is to combine the flexibility and convenience that online, mobile and social channels deliver, with the customer service and tangibility of the physical shopping experience. By bringing together these elements, retailers will make their offerings and service more compelling to their customers. This in turn will lead to increased revenue and improved brand value for the businesses themselves.”

Etailers' trade body the IMRG also released figures today showing traders took £6bn online in January. That's 16% up on the previous January and equivalent to £118 per person.

The IMRG-KPMG e-Retail Sales Index showed travel sales had increased by 205% since December as families booked their summer holidays and were also up by 16% since the previous January, but the clothing, footwear and accessories category took 38% less than December but 13% more than last January. Alcohol sales were 66% lower than in December but 23% higher than last January.

But Chris Webster, head of retail consulting and technology at Capgemini, said: “There’s little cheer in these results for retailers. While consumer price inflation is steadily decreasing, it has thus far failed to reinvigorate consumer spending. The steady march of customers moving from the high street to online channels continues and if anything, accelerates as savvy shoppers look to make their wages stretch further.”

Tina Spooner, chief information officer at IMRG, said she detected several interesting factors. "The first," she said: "is the average travel spend exceeding £1,000 for the first time as, while many consumers look to curtail their expenditure on luxuries, the more affluent consumers can still look to treat themselves with an expensive holiday.

"The second factor is the lack of a small spike in spending in late December / early January, usually influenced by the post-Christmas sales initiatives. This could be due to the fact that heavily discounted products have been consistently available for months, so the introduction of a new sales period would have had less impact.

“Thirdly, there may be an emerging trend in the sales of clothing. In recent years, this sector has recorded average growth of over 20% but year-on-year growth has slowed considerably in recent months, recording average growth of just 11% between November 2011 and January 2012.”

Todays's retail sales news comes as figures from the Local Data Company and PricewaterhouseCoopers showed major retailers closed more shops than they opened in 2011, at a time when more purchases are being made over the internet.

The figures showed 5,268 shops were closed and 5,094 opened resulting in 174 fewer stores overall. This was the first time for such a change since the height of recession in 2009. Convenience stores, pawnbrokers and supermarkets were among those being opened while closures were at their height among bookshops, electrical and home-furnishings retailers.

"The rise in convenience stores is due to them being a growth platform for supermarkets needing to meet consumer demand for local shopping outlets where it's easy to do regular big shops as well as 'top up' and have easy access to fresh produce," said Mike Jervis, PwC insolvency partner and retail specialist.

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