Shoppers spent more online in February than in January – but less than a year earlier, the latest official figures suggest. While ecommerce spending rose by 2.6% on the previous month – and fell by 3.5% on a year earlier – spending continued to lag behind inflation, which, recent ONS figures show, came in at 10.4% on the Consumer Prices Index. The proportion of sales taking place online stayed steady at a quarter (25.4%).
Across all channels – three-quarters of spending remains in-store – shoppers spent more (+6.3%) to buy fewer goods (-3.3%) than last year, today’s ONS Retail Sales report estimates. And they spent 2.2% more than in January to buy 1.5% more products.
The effect of inflation was starkly shown in figures that show spending last month was 16.9% above pre-pandemic February 2020, while shoppers bought only 1% more goods than they did in that month.
How shoppers spent online
Just over a quarter (25.4%) of retail sales took place online. That’s 3.5% down on last February, but 2.6% up on the previous month. The ecommerce share of retail was broadly in line with the previous month (25.3%) and remains well ahead of pre-pandemic February 2020, when 19.8% of sales were online.
Online food sales were 8.1% online, with spending 1.5% down on last year but 0.5% up on the previous month.
Just over a fifth (20.6%) of non-food sales took place online. That’s 5% down on the previous year, but 0.7% up on the previous month.
Clothing, footwear and textiles shops (+4.3% year-on-year/0.4% month-on-month) saw sales rise, with 24.3% sales in the category now online. Department stores, where 21.8% of sales were online, also saw a boost to ecommerce spending (+0.9%YOY/+2.1% MOM).
But online sales fell in other categories, most sharply in the ‘other’ stores category – which includes electricals, booksellers, jewellers and more – where sales were 17.2% down on the previous year, although 2.9% up on January 2023. In the household goods category, online spending was also down, by 6.6% on the previous year and 2.9% on the previous month.
In the non-store retailing category, one dominated by pureplay retailers, 92.9% of sales were online – and online sales were 2.9% lower than the previous year, but 4.5% higher than in January. Sales volumes in the non-store category rose by 0.2% in February compared to January.
How shoppers spent across channels
In February, shoppers spent 6.3% more than a year earlier to buy 3.3% fewer goods, excluding automotive fuel. They also spent 2.2% more than in the previous month, January 2023, to buy 1.5% more goods, again, excluding automotive fuel.
Department stores, clothing and second-hand stores all saw a boost as non-food sales volumes grew by 2.4% month-on-month, but were also 1.7% lower than last year. Discount stores drove monthly boosts to sales volumes in both the department store (+5.5%) and clothing store (+2.9%) categories. Meanwhile, growth in second-hand stores such as charity shops and auction houses meant a 1.7% boost to sales volumes in ’other’ non-food stores.
Food sales volumes rose by 0.9% in February compared to January. This, says the ONS, “may be because of reduced spending in pubs and restaurants as people eat in more because of cost-of-living pressures”.
Industry comment
Paul Martin, UK head of retail at KPMG, says: “Retail sales growth in February was driven by non-food purchases as consumers loosened the reins slightly on non-essential spending and headed to the discount stores in search of bargains.
“With food inflation running at nearly 20%, volume growth of just under 1% will be eating hard into the margins of supermarkets and food retailers, who will be fighting hard to make sure they get promotion strategies right to entice consumers to spend. As we head into April, where consumers are facing rising energy, mobile and council tax bills, retailers will be hoping for a turn in the weather and a buoyant Easter to help drive sales growth.”
Steve Ponting, director, Software AG UK&I , says: “”As we’ve seen previously, inflation and high prices don’t always translate to a drop in spending. February saw an 1.2% increase in retail sales. However, what we are actually seeing is consumers getting less bang for their buck, as a 40-year high inflation masks increased sales with higher prices. As the cost-of-living bites into disposable incomes, consumers continue to search for the best price and, although familiarity with a brand can help, recognition doesn’t set retailers apart anymore. It may be time for ‘traditional’ grocers to stop competing on price with Lidl and Aldi and start competing on their own terms. Price is just one piece of the puzzle, but all retailers must provide value, service, and trust if they want to set themselves apart. When times are tough, those players that aren’t resilient or agile, get separated from those who are, and customers notice.
“With food prices surging at their highest rate for 45 years, it is crucial for retailers to prioritise their customers’ needs by listening to what they want and making informed decisions. Actively listening to customer feedback, enhancing loyalty programmes, providing seamless experiences, and ensuring that consumers have access to the right products at the right time, will result in more satisfied – and returning – customers.
