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Online spending took a record 35% of January UK retail spending; total spending falls as non-essential retailers stay closed

'Being able to target the right message to the right person at the right time is one of the beauties of digital marketing' Image: Fotolia

Online claimed a record 35.2% share of UK retail spending in January, as shoppers turned online to buy during lockdown 3.0, according to official figures out today. A year earlier, ecommerce accounted for 19.5% of retail sales – while the proportion spent via the internet reached 29.6% in December. Today’s Retail Sales report from the Office for National Statistics (ONS) suggests that the rise comes as retailers are now better equipped to sell online and to offer click and collect services. 

A greater proportion of food was bought online than ever – with 12.2% of grocery spending taking place online. The proportion of spending taking place online grew in all categories compared to the previous month. 

But the steady shift online comes as UK retail sales across all sales channels showed the effect of the January lockdowns – with volumes falling by 8.8% compared to December, and by 3.8% year-on-year. January retail sales were 5.5% lower than in pre-pandemic February 2020, showing that retail sales were not hit as hard by lockdown 3.0 as they were by lockdown 1.0 in April 2020, when sales were 22.2% down on the February benchmark. The ONS report says, “Anecdotal evidence suggested that during the current period of restrictions, improved online capability and click and collect purchases helped to lessen the impact with a fall of 5.5% in January 2021 compared with February 2020 levels.”

What shoppers bought online

Online spending in January was 72.7% higher than a year earlier, and 9.2% higher than in December. More than a third of retail sales (35.2%) took place online during the month.

Online food sales were 143.5% higher than in January 2020, and 11.5% higher than in December, as 12.2% of sales in the category took place over the internet. “Food stores,” says the ONS report, “reported a record proportion of online sales this month of 12.2%, with anecdotal feedback from retailers suggesting that click and collect food orders had boosted online sales.”

Non-food ecommerce sales were 90.2% higher than a year earlier, and 10.4% higher than the previous month – and 39.4% of non-food sales were online. Half (50%) of all clothing, footwear and textile sales were online, with ecommerce sales 48.9% ahead of last year, and 0.6% up on December. 

Department stores saw 37.4% of sales take place online after growing by 84.9% on last year, and falling by 9.1% compared to December. ‘Other’ stores, from electricals retailers to booksellers and jewellers and toyshops, saw e-commerce sales rise by 135.1% on a year earlier, and by 31.1% on the previous month, to account for 39.9% of sales in the category. And non-store retailers saw 82.6% of sales take place online, following year-on-year growth of 46.9% and month-on-month growth of 7.5%. 

Household goods saw the lowest proportion of sales take place online, perhaps because more homewares stores were able to open. Here, online sales still grew by 110.1% on last year and 22.6% on the previous month to account for 31.5% of sales. 

What shoppers bought across channels

January spending fell by 4.3% compared to a year earlier as shoppers bought 3.8% fewer goods, excluding automotive fuel. It fell by 8.3% when compared to the previous January, as shoppers bought 8.8% fewer goods. 

Spending was up in food stores, where shoppers bought 1.4% more groceries across sales channels than they did in December. Retailer feedback suggested food and alcohol sales rose at a time when the hospitality sector was closed. And spending was also up in non-store retailing, with shoppers buying 3.7% more than in December – benefiting as multichannel or store-only retailers temporarily closed shops. 

Spending fell by almost a quarter (24.4%) across all non-food categories, compared to December, with those selling clothing (-34.7%) particularly hard hit. Department stores sales fell by 14.9% overall, and household goods sales by 19.4%. However, the decline was not as severe as that seen in the first national lockdown – clothing fell by 49.2% in April, compared to March, and household goods sales by 49.9%. 

How shoppers bought clothing in lockdown

Clothing retailers were affected as shoppers turned to supermarkets to buy clothes at a time when clothes shops were classed as non-essential retailers and had to close temporarily. Before the Covid-19 pandemic, the ONS report says today, more than 60% of all clothes were bought from non-food retailers, but this fell to 33.2% in April and 32.4% in May. At the same time, 26.6% of clothes were bought from food retailers, including supermarkets, in May and 45% from non-store retailers – primarily online retailers. “This increase,” says the ONS Retail Sales report today, “saw the proportion of clothing sold in non-store retail exceed that of traditional clothing stores for the first time.”

Shoppers returned to buy most of their clothing from clothes shops once they were able to trade, but in January 2021, 44.2% of clothes were bought from non-store retailers, and 32.4% from food shops such as supermarkets. 

Industry reaction

Commenting on today’s figures, David Jinks, head of consumer research at parcel comparison specialist ParcelHero, says the figures show that non-essential stores are essential. “Non-essential stores will not survive a fourth lockdown; they need to know this will be the final one,” he says. “That is the only way they will be able to plan confidently for the future. It’s vital the Prime Minister stands by the pledge he made earlier this week: ‘We want this lockdown to be the last. And we want progress to be cautious but also irreversible.’”

Jinks says the high street will be very different following this “lockdown to end all lockdowns”. “Topshop, Dorothy Perkins, Burtons, Miss Selfridge and Wallis are among the long rollcall of casualties who won’t be reopening their doors again when the shutters finally go up across Britain,” he says. “It’s no coincidence that these once dominant High Street stores are moving to online only. Once again, online sales helped shore up spending and avoid complete retail meltdown. Online sales hit a record high, seizing over a third of the entire retail spend, ballooning by 72.7% compared to January 2019, with all non-food store sales up 90% year-on-year (YOY) and online household goods sales up 110.1% YOY.

“As big-name High Street fascias disappear, it will be up to indie stores to fill in the gaps and restore the fortunes of our town centres. That’s why it is vital that the Government gets its roadmap for ending lockdown right.”

Elliott Jacobs, EMEA commerce consulting director at digital agency LiveArea, says: “The rising proportion of online spending is no surprise. Retailers have been forced to rely on ecommerce, with physical shops closed.

“While 42% of retailers were focusing on digital investment in May of 2020, cash alone does not make a successful strategy. Time and again this year has proven that focusing on speed and flexibility of digital rollouts is the real determinate of longevity. Companies, like Asos and Boohoo, with seamless checkouts, clear returns policies, and consistent messages across all platforms have won through and consolidated the market. Given their standing start, the reality is many more household name retailers will go under in the coming months – to remain relevant and afloat they need to innovate at speed, finding the ecommerce strategy that works for them.”

Karen Johnson, head of retail and wholesale at Barclays Corporate Banking, says: “Although these results are the first of the new year, there’s nothing new about the state of lockdown that the UK retail market finds itself in. 2021 has started where 2020 left off, with overall spending down – and the ability of consumers to go out and shop hit hard by the closure of all non-essential stores.

“As with previous lockdowns, there have been some rays of sunshine to report amidst the clouds. Consumers remain committed to improving the surroundings that they find themselves in most at the moment: as spending on items within the home has continued strongly. There have also been some successes to report amongst retailers providing ‘feel-good’ subscriptions that can be delivered to the door, with food boxes and fresh flowers all rising in popularity.

“Looking ahead, retailers will be keen to see how many of these ‘lockdown habits’ continue once restrictions are lifted. Many will also hope that pent up demand for both clothing and beauty will help boost sales, once people are able to go out and socialise again.”

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