Ecommerce once again took a record proportion of UK retail sales last month, according to official figures. Sales shifted online at a time when non-essential shops were closed across the UK for Covid-19 lockdowns. But across all channels, overall sales were down on last year, but up on January.
More than a third (36.1%) of retail sales took place online in February according to the Office for National Statistics (ONS) Retail sales report for February 2021. That’s the highest online share recorded by the ONS to date – and ahead of 35.2% in January 2021. Pre-pandemic, 20% of sales were online a year ago. The growing share of sales came as online sales grew by 77.6% on the same time last year, and by 4.6% on the previous month.
Most retail sales still take place in shops, and across all UK retail sales channels shoppers spent 1.6% less in February than they did a year ago, to buy 1.1% fewer goods, excluding automotive fuel. Clothing sales halved (-50.4%) in volume over that period, while spending on fuel (-26.5%) was also sharply down. Non-food sales, excluding fuel were, according to BRC analysis, 25% down on last year.
Shoppers spent 2.2% more than in January to buy 2.1% more goods, according to seasonally adjusted ONS figures. They spent 1.3% more, month-on-month to buy 1.5% more non-food goods. Spending in department stores (+16.2%) and household goods stores (+16.1%) both up. Growth in department store spending, says the ONS, came mostly from budget department stores that could stay open because they sell food and essential items.
“Anecdotal evidence from household goods stores,” says today’s ONS Retail sales February report, “suggested that the monthly growth of 16.1% in February 2021 could be attributed to the purchase of DIY products as consumers continue to improve their homes during lockdown. Retailers also noted there was evidence of consumers buying outdoor products earlier in preparation for the easing of lockdown restrictions, particularly the ability to meet friends and relatives in private gardens as the weather improves.”
But in the three months to February 2021, retail sales were 6.3% lower, by volume, than in the three months before that.
How ecommerce grew across categories
Online sales grew across categories as ecommerce grew in February by 77.6% on the same time last year, and by 4.6% on last month, to take a 36.1% share of online sales. Food sales grew by 141.3% on the same time last year, and by 0.5% on the previous months – to account for 11.9% of sales in the sector. Non-food sales grew by 98.5% year-on-year, and by 10.3% month-on-month as 41.9% of retail sales took place online.
Almost half (48%) of online sales are made by retailers that don’t have stores. These are largely pureplays – although the category also includes market stalls and auctioneers – and 85.5% of sales in this category took place online in February. That’s 50.1% more than at the same time last year and 1.4% more than in January.
The clothing, footwear and textile category has shifted further online over the last year. Ecommerce sales grew by 36.3% year-on-year, and by 1.2% on January, as 57.6% of retail sales in the category took place online. As mentioned above, however, clothing sales across all channels halved in February, compared to February 2020, as many clothes shops were closed in the Covid-19 lockdown.
Some 38% of household goods sales took, as online sales in the category grew by 180.4% on last year, and by 35.9% on last month. And department stores saw 36.4% of retail sales take place online. Ecommerce grew by 108.7% compared to last February, and by 14.8% compared to last month. Retail sales in the broad ‘other’ category that takes in book and music shops, as well as jewellers and electricals retailers, were 40.5% online, having grown by 120.4% on last year by falling by 1.5% compared to last month.
Industry reaction
Helen Dickinson, chief executive of the BRC, says: “Retail sales fell for the second consecutive month in February, and non-food stores saw their fourteenth month of decline with a massive 25% drop. UK stores have now lost a whopping £27 billion from lost sales during the three lockdowns. This is already impacting retail employment, with 67,000 retail jobs lost between December 2019 and 2020. While the Prime Minister’s roadmap helped boost spending on back-to-school items, consumer demand remained weak overall. Meanwhile, online sales remained strong, providing a lifeline for customers, and rewarding those retailers who have adapted and grown their digital offering over the last 12 months.”
Silvia Rindone, EY UK & Ireland retail leader, says: “The ongoing closure of non-essential stores continued to limit overall retail sales in February. Figures were again below average compared with previous years, but online sales have continued to enjoy significant growth. However, consumers are becoming more discerning when it comes to the online shopping experience, so retailers must continue to improve their online offer and not take continued growth in this area for granted.
“Our most recent Future Consumer Index has found that 25% of consumers are growing frustrated with not being able to find what they are looking for easily when shopping online. For the grocery sector, almost half of consumers do not shop online because they have less control over purchases and only 11% believe grocery websites are better than physical stores.
“As retailers look forward to the reopening of non-essential stores, they will need to be strategic about balancing their in-store and online operations.
Richard Lim, chief executive of Retail Economics says: “The industry continued to see a sharp polarisation in the performance of food and non-food as restrictive measures forced the closure of many retail premises. Non-food retailers saw sales plummet on the previous year with apparel retailers being some of the hardest-hit.
“But as the third lockdown took hold, shoppers effortlessly switched to digital channels as the proportion of online sales reached new record highs. Online grocery shopping continues to grow exponentially and it seems inevitable that some consumers will adopt these shopping habits for good.
“Likewise, retailers have become increasingly agile operating through periods of lockdown. Strategies are in place and measures have been formed to quickly shift towards digital channels for many parts of the market. That said, the industry continues to struggle with the sheer pace of change. Significant investment has been made in boosting warehouse capacity, enhancing logistics and expanding distribution networks to meet the challenge of a step-change in online shopping.”
Lynda Petherick, head of retail at Accenture UKI, says: “If the last year has shown us anything, it’s that consumers are willing to embrace ecommerce wholeheartedly when deprived of physical retail, which has been especially evident in this month’s record-breaking online expenditure. While we expect this shift online to outlast the pandemic, catering for the increased demand for physical stores is also crucial. Brands will have to think carefully about how they factor in the different channels to their future strategies to make sure all customer needs are met, combining a safe and engaging in-store experience with an advanced digital offer. Those that are slow off the mark now will find it harder to catch up later.”
