Internet shoppers bucked the high street trend of declining sales in May by spending more online, according to two sets of figures out this week.
The Office for National Statistics' calculations suggested that ecommerce increased its share of the retail market, excluding automotive fuel sales, to 9.4% in May, up from 7.4% at the same time last year and 8.5% in April. The average value of weekly online sales this May stood at £527.3m, up from £409m last year, which would seem to give a rise of 28.9%.
The ONS said an overall growth in UK retail sales of 3.8% since last May was driven by non-store sales, which include online sales. Retail sales were down by 1.4% in value compared to the previous month. Strikingly, food store sales fell by 3.2% in value compared to the previous month, the largest such fall on record. They were up by 1.7% compared to the previous year.
Earlier in the week, the IMRG Capgemini e-Retail Sales Index, said the UK’s shoppers spent £5.3bn spent during the month, 18% up on the same time last year and 2% up on the previous month. But, concludes the IMRG, while consumers were parting with more money, they were buying cheaper goods.
So far this year, calculates the IMRG £25.7bn has been spent over the internet, representing total growth of 18% and in line with IMRG’s forecast for the year. May’s spending was driven by lower-value clothes and alcohol sales but sectors selling high-ticket items were slower.
“Online is continuing to set the pace in retail,” said Tina Spooner, director of information at IMRG, the industry body for online retailers. “However we are seeing a pretty clear split between the sectors selling low-cost products and those selling high-value ones, with travel, electricals and home and garden lagging some way behind in terms of growth.
“So although overall growth is very positive, perhaps consumers are wary about making big ticket purchases in the current economic climate.”
Alcohol sales rose by 25%, compared to last year and 5% compared to April, with the average basket value hitting £161. Meanwhile sales of clothing were up by 24% on last year.
The travel sector also grew, with a 12% rise on May 2010 and a 13% rise on April. But the average amount spent rose by £200 on last year, to £869, a figure that may reflect last November’s rise in flight taxes and an increase in flight ticket prices. If the travel sector is left out of the figures, the year-on-year growth in total online spending rises to 21.5% for May.
The figures contrast with those released by the British Retail Consortium (BRC) earlier this month. The BRC suggested total UK retail sales fell by 2.3%, like-for-like, while online spending growth slowed to 10.4%. This is a weaker rate of growth than the 18% suggested by the IMRG, but still much stronger than the fall in total sales, which reflects the much larger share of the high street in the UK retail market.
Technology company Capgemini sees strong evidence of migration online in the contrast between online and high street spending. Its head of retail consulting and technology, Chris Webster, said: “While the high street suffers in the wake of the struggling economy, consumers continue to migrate online.
“However it is important to note the disparity between the big ticket items, such as electrical goods, and the less expensive items, like clothing and alcohol. As the economy suffers, expensive purchases are increasingly seen as discretionary.”
As a group, multichannel retailers who trade both in the high street and online grew faster than online-only retailers in May, seeing average growth of 23%, 5% up on last month, compared to the 9% growth realised by those who trade online and/or through catalogues.
Cameron McLean, general manager for merchant services at PayPal UK, said: “More and more retailers are adopting a multichannel approach to their platforms which has led to a 23% year-on-year performance, demonstrating the benefits of giving consumers the flexibility of shopping when they want and how they want.” He added: “With many online shoppers seeing the best value online, and online retail sales figures increasing, a strong multichannel retailing strategy is essential for businesses to not only offer a range of options for shoppers but also to attract new shoppers.”