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High temperatures and rising World Cup excitement helped to lift June online retail sales, but store sales fell at the same time

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Hot weather and rising World Cup excitement helped to lift UK online retail sales strongly in June – but seem to have dented store sales at the same time, figures out this week suggest. 

Online sales grew by 14.3% during the month, estimated the Office for National Statistics (ONS) in its June 2018 Retail Sales report, to account for 18% of all retail sales, while the latest IMRG Capgemini e-Retail Sales Index puts the rise at 16.9%, both compared to the same time last year. 

But, suggested the ONS figures, while the warm weather led to higher spending in grocery stores, and online food sales grew by 13.3% to account for 5.6% of all spending  in the category, non-food online sales grew more rapidly, by 20.8% to account for 14.4% of all non-food sales.

Sales in food stores grew by 5.9% in value, compared to a year ago, buying 3.8% more goods, but stayed flat compared to the previous month. Non-food store sales fell by 0.5%, month on month, while, year-on-year, shoppers spent 0.6% less in non-food stores in June, and bought 0.4% fewer goods than they did a year earlier. 

Retail sales across all channels, including the store, grew, according to ONS figures, compared to last year as shoppers spend 5.3% more money to buy 2.9% more goods. But they fell compared to last month, as shoppers spent 0.3% less money to buy 0.5% fewer goods. Some 18% of all retail sales took place online, said the ONS figures, which showed strong online sales growth in department stores (+22.6%; 16.8% of all sales) while textiles, clothing and footwear online sales grew by 16.6% to account for 17.5% of all sales in the category.

ONS senior statistician Rhian Murphy said: “Retail sales grew strongly across the three months to June 2018 as the warm weather encouraged shoppers to buy food and drink for their BBQs. 

’However, in June retail sales actually fell back slightly, with continued growth in food sales offset by declining spending ian many other shops as consumers stayed away from stores and instead enjoyed the World Cup and the heatwave.”

The latest IMRG Capgemini e-Retail Sales Index detected an online sales rise of 16.9%. Multichannel and online retailers both benefitted from these factors: their sales grew by 14.8% and 18.7% respectively. 

Andy Mulcahy, strategy and insight director, IMRG, said: “Sales growth for UK online retail has been consistently strong so far in 2018 – in spite of the fact that there are signs of a slowdown underway. The smartphone has been the main device accounting for that high growth, yet despite sales being up +34% through these devices in June, it was actually the lowest growth rate for smartphones since October 2014.

“The reason that this lower rate is not causing a wider slowdown in the overall index is likely due to the fact that smartphones now account for over one-third of total online retail sales. For many people, they are either already, or well on their way to becoming, the device of choice for browsing and shopping in most contexts.”

The fastest growth was seen in the garden sector, with sales up by 49.9% on last year,  perhaps reflecting a month of World Cup barbecues and outdoor living.  

Sales of clothing (+19.3%), accessories (+23.9%), and footwear (+22.7%) all grew strongly during the month. Less favoured were sales of health and beauty (+9.9%) and gifts (+10.5%).  

Bhavesh Unadkat, principal consultant in retail customer engagement, Capgemini, said: “June has seen continued buoyant sales online, strongly influenced by fashion and seasonal items.  This has boosted non-essential spend while customers make the most of the buzz created by the good weather and the World Cup.

“We might question what the longer term effect is as Barclaycard report that one in three Brits have spent more than normal so far this summer. This could result in a slowdown as customers align the potential overspend so far this summer in the later months of the year, supported by 4 in 10 saying they will hold off purchasing big ticket items.  Electrical and home sectors have the lowest June year-on-year growth in the last five years, a reminder of caution during political uncertainty and upcoming interest rate increases.”

Image: Fotolia

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