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Ecommerce falls back in May as shoppers return in-store

Image: InternetRetailing Media/Paul Skeldon

Online sales fell in May as customers returned to now-open shops and as overall retail spending subdued after a busy April, the latest official figures suggest.

Some 28.5% of non-food sales took place online last month, down from 29.8% in April, and 34.7% in March, the ONS Retail Sales report for May suggests. But while the level of sales taking place over the internet has subdued steadily since shops opened, it still contrasts with pre-pandemic February 2020, when 20% of sales took place online, according to the ONS.  

Today the ONS said that online sales were 58.8% higher, by value, in May 2021 than in February 2020. In-store sales, on the other hand, were 1.3% lower.

Sales across retail channels 

Across all sales channels – primarily shops – shoppers spent 1.4% less in May than the previous month to buy 2.1% fewer goods, excluding automotive fuel, following the April rebound when non-essential shops reopened. But retail sales were 7.7% higher than in March 2021, and 9.1% higher than in pre-pandemic February 2020. 

Compared to May 2020, when the first lockdown was in force, shoppers spent 23% more to buy 21.7% more goods, excluding fuel, in May 2021. 

Across channels, sales at food stores were 5.7% down, by volume, as shoppers started to return to restaurants and bars to eat and drink. Non-food stores saw their sales increase by 2.3%, with the highest growth at shops selling household goods (+9%) and at ‘other’ shops (+7.7%), a broad category that includes booksellers, jewellers and electrical goods retailers. Automotive fuel sales (+6.2%) also started to rise, as travel increased. 

How online shoppers spent

Online accounted for 28.5% of sales in a month when shoppers spent 5.7% less online across all retail categories than in the previous month, and 2% more than at the same time last year. 

Today’s ONS report suggests that all sectors saw their online sales fall compared to the previous month of April, and that retailer feedback indicates online were hit as shoppers returned to stores. 

The report says: “This is the third consecutive monthly fall in the proportion of online spending. However, the proportion of spending online is still significantly higher than the 19.9% reported in February 2020 before the impact of the coronavirus pandemic.

“Despite the recent fall in the proportion of retail sales being online, the pattern of sales is different to pre-pandemic patterns. The value of retail sales online in May 2021 was 58.8% higher than in February 2020, whereas the value of retail sales in store in May 2021 was 1.3% lower than in February 2020.”

In May 2021, 10.9% of food sales took place online, according to the ONS figures, with spending 4.4% down on the previous month, and down by 6.9% on the previous month. 

A quarter of non-food sales were online, with shoppers spending 7.5% less than in April, and 8.1% more than at the same time last year. 

Almost half of online spending is accounted for in the ONS index by non-store retailing, accounting for 48% of the index and mostly made up of pureplay retailers, but also including market stalls and auctioneers among others. Some 79.9% of sales in this category were online in May, with spending down by 4.6% compared to the previous month and up by 0.4% compared to last May. 

Among the multichannel categories, clothing, footwear and textile spending saw the largest proportion of sales (28.8%) take place online, as spending fell (-3.8%) on the previous month but grew (+46.6%) on the previous year. 

Some 26.9% of department store spending was online, but this was down by compared to the previous month (-1.4%) and the previous year (-3%). 

More than a quarter of household goods sales (25.3%) were online, again, down on the previous month (-8.3%) but up on the previous year (+6.5%). And spending in ‘other’ stores accounted for 20.7% of sales in the category, down on both the previous month (-14.3%) and the previous year (-9.4%). 

What the commentators say

John Federman, chief executive of experiential relationship management (XRM) firm JRNI, says: “With in-store sales overall declining slightly during May, there can be no doubt that the omni-channel shift is here to stay.  Lockdown restrictions are now continuing until at least July 19, so retailers need to continue to demonstrate commitment to creating safe shopping environments and ensure they can offer a safe and frictionless shopping experience.

“Having no choice but to try a variety of digital experiences early on in the pandemic means consumers have had their eyes opened to what the customer journey really could look like. They now want to shop when, how, and where they want – yet still expect exceptional customer service and a unique experience. Retailers need to look at how they can seamlessly blend the customer journey across all channels, personalising experiences at scale through in-person and remote appointments, virtual queuing, curbside pickup, and click and collect.”

Dominic Watkins, head of consumer at legal and business services provider DWF, says: “While we are starting to see a correction from the dramatic shift to online shopping, and future months are likely to bring further corrections, online retail sales are still substantially higher than pre-pandemic levels and Boris Johnson’s announcement this week that stage four of lockdown easing will be delayed until July 19 2021 due to the rapidly increasing spread of the Delta variant, will be a blow for those primarily reliant on stores or who have to meet the costs of stores that are struggling to perform profitably.”

He adds: ”Businesses want certainty and consistency in order to plan, however for the foreseeable future this will be in relatively short supply as we see further adjustments and readjustment in consumer behaviour. The retail sales figures once again highlight the importance of diversification within the sector and providing people with creative and innovative ways of shopping, whether that’s through apps, virtual personal shoppers and other technologies, or addressing the whole shopping experience if retailers want to increase footfall and tempt shoppers back to physical locations.”

Silvia Rindone, EY UK and Ireland retail leader, says May had a “disappointingly slow start” in the first full month of trading after non-essential stores reopened, with wet weather and lower footfall.  “When consumers do visit stores, they are shopping with a purpose and intending to buy, rather than to browse,” she says. “Consumers’ propensity to spend may diminish over the summer as government support measures, such as the furlough scheme, begin to taper. Value for money will continue to be a key concern for many consumers. Where they do spend, consumers are also looking to maximise social experiences so retailers will need to focus on meeting these expectations in stores. This is particularly important in the face of increased competition from the leisure and hospitality sector for consumer discretionary spending.

“At the same time, retailers will face additional financial pressures, with the Government also beginning to reduce business rates relief. While the commercial evictions ban has been extended once again, some businesses are continuing to accrue rent arrears that they will eventually have to repay. Sales in June and July are likely to pick up – with better weather and lockdown restrictions scheduled to lift – but the autumn may well be a challenging period for the sector. Retailers need to act now to reshape their businesses for longer-term resilience and growth.”

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