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Online sales drive up spending across UK retail to a 31-year high, says ONS

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Total retail sales in the UK and the Netherlands are more than double what they were in 1989, with huge gains in food sales and the rise of ecommerce seeing UK shoppers spending more than many other shoppers globally.

According to data from the Office of National Statistics (ONS), Online retail sales have growth at a substantially faster rate than in-store, increasing from a 3.4% share of all retail sales in 2007 to 27.9% in 2020. The rise in online spending has been more substantial in the Netherlands and UK than other European counterparts.

From November 2006 to February 2020, all retailing – except automotive fuel sales – saw a ten-fold increase in online sales, showing how online retail was already growing strongly prior to the pandemic.

In total, says the ONS, online sales as a proportion of all retailing has risen from 3.4% share in 2007 to 27.9% in 2020. The large increase in internet access will likely be one of the factors contributing to the increase in internet sales. Between 2008 and 2019, the proportion of daily internet users increased by 38 percentage points (87% in 2019) and over the same period internet users shopping online increased by 29 percentage points (82% in 2019).

In line with increased consumer internet usage, businesses have also increased their online presence. The proportion of UK businesses, with 10 or more employees, making e-commerce sales increased from 17.1% in 2009 to 28.6% in 2019.

In the period from November 2006 to February 2020, online sales in the non-store retailing and textile, clothing and footwear stores sectors performed particularly strongly with  a fourteen and twelve-fold increase, respectively. These sectors are likely to have performed strongly in online sales as they were suited to the advantages of online retail. Online sales contributed 81.6% to total non-store retailing in 2020, compared with 30.4% in 2007.

Predominantly food stores performed worst out of the main sectors in online sales between November 2006 and February 2020, but still saw a six-fold increase. The Office for National Statistics (ONS) Internet Access survey showed that in 2019, 29% of adults reported purchasing food or groceries online in the last 12 months.

The relatively slower growth in online retail sales may be explained by customers deterred by high delivery charges, minimum spends, and preference to choose fresh products themselves. These are problems that will affect predominately food stores more than other sectors, as food products typically have short shelf life, and help explain the slower growth compared to other sectors.

Global growth

Looking globally, retail trade increased most in Canada, France and the UK, with all three countries’ retail trade volumes almost double their 1995 levels in 2020. All have largely witnessed growth in household income alongside a falling – or stable in the case of France – household savings ratio.

Retail Sales in Japan and Italy have shrunk from their 1995 levels, amid a 7.3% fall in Japanese gross domestic product (GDP) between 1995 and 2020 and a near 10% drop in Italian household disposable income between 2005 and 2020.

The contribution of online sales to total retail sales has been broadly growing across Europe since 2000, but the UK and the Netherlands are unique in their magnitude, seeing a more than eight-fold and ten-fold rise respectively.

Growth in online sales has been largely concentrated over the last seven years, with a greater number of retailers moving online and increased internet access across all countries. The impact of the pandemic on online sales has been most notable with many countries seeing the closure of non-essential in-store retail. For the first year in the period observed since 2000, all countries in the study recorded double-digit growth in annual online sales in 2020. It was also the largest annual growth rate in online sales for five of the countries and regions observed.

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