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Ecommerce growth sets a slower pace

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Online sales growth slowed last month, recording one of the weakest rises the sector has seen for almost two years, according to new figures out today.

The British Retail Consortium (BRC) says that internet, mail order and telephone sales rose by 9.6% in July, compared to the same time last year. That’s fast growth compared to the 2.5% growth – or 0.6% in like-for-like sales – seen across UK retail, but the weakest seen online for almost two years, with the sole exception of this March.

In June this year, growth in the category was at 11.5% while in July last year it was at 11.3%.

“This is good growth compared with the high street where non-food sales are barely growing at all,” said Stephen Robertson, director general of the British Retail Consortium, “but it’s well down on the double-digital results we’ve seen for non-store sales in most of the months since we began this measure in October 2008.

“Apart from March, when sales were reduced by this year’s later Easter, this is the weakest growth for non-store sales of non-food goods for almost two years.”

Looking at overall growth figures for UK retailers, he said growth of 2.5%, bearing in mind January’s VAT increase and inflation, meant that people were buying fewer goods, and he called for fast action to boost consumer confidence before “spending paralysis sets in.” He said that would mean implementing strategies in the US and in Europe to reduce public sector deficits while supporting growth.

Robertson predicted that while online shopping would continue to grow long-term, in the short term that growth would slow. “The long-term progress of online retailing means internet shopper numbers and how much they’re buying continue to increase but the squeeze on household budgets is causing that to slow as people cut back where they can,” he said.

Commenting on the UK retail sales figures, Joanne Denney-Finch, chief executive of the IGD, price comparison was key in the food and drink sector. “Our latest ShopperTrack research reveals 51% of people say they are checking the price of every single item they put in their shopping basket,” she said. “A similar number of shoppers are comparing prices between products and between stores. Food retailers, together with manufacturers, are responding with new ways to help shoppers keep to a budget via coupons, meal deals and price campaigns.”

Meanwhile, Helen Dickinson, head of retail at KPMG, said: “July was a better month than June, seeing an improving trend for the food sector and an uplift for clothing when the good weather finally kicked in. However, retailers of big-ticket items continue to find the market conditions challenging, with customers still reluctant to make major spending commitments.

“With pay rises hard to come by, consumers continue to feel the squeeze of higher prices and an uncertain outlook. Retailers are hunkering down and managing stock tightly and none is particularly optimistic about the outlook, although many expect inflationary pressures to decrease in the latter part of the year.”

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