Shoppers feasted on November’s Black Friday discounts online, spending 73% more over the internet with department stores and 40% more with fashion and footwear retailers than they did in October, new official figures suggest. A record 21.5% of all retail sales in November took place online, according to the latest ONS Retail Sales Report for November. It’s the first month that ecommerce has ever accounted for more than 20% of all sales, and came as overall internet sales grew by 13.1%, compared to the same time last year – and by 36.3% compared to last month. However, sales in October were slower than in the buoyant summer months.
It’s clear that discounting helped to fuel spending, as retailers slashed prices for Black Friday and the wider Cyber Week, according to today’s Retail Sales Report: November 2018, from the Office for National Statistics. Shoppers, now well-educated to expect price cuts, also seem have to held back from spending in October – itself a record month for fashion and footwear online sales – as they waited for November’s discounts to kick in.
Shoppers spent an average of £1.8bn a week online during the month – growth that helped lift overall retail sales. Across all channels, shoppers spent 4.4% more than they did last November (excluding automotive fuel) to buy 3.8% more goods. Compared to the previous month of October 2018, they spent 1.4% more to buy 1.2% more goods. But the overall trend remains one of slow growth – shoppers spent 0.6% more between September and November to buy 0.5% more goods than they did over the summer months of June, July and August.
November’s growth, said the ONS, was down to extensive discounting on and around Black Friday. “Retailers reported strong growth on the month due to Black Friday promotions in November, which continues the shifting pattern in consumer spending to sales occurring earlier in the year,” said the report.
It’s also worth noting that while November 23 – Black Friday – was included in the figures for this report, November 25 – Cyber Monday was not. Today’s report covers the four weeks from October 28 to November 24.
Strong online growth in department stores and fashion
Underneath the headline year-on-year figure of 13.1% growth in online retailing there’s an interesting range of figures. Annual growth was fastest in fashion and footwear stores (+20.7%), household goods stores (+20.6%) and department stores (+20.7%). Other stores, by contrast, grew by just 4%, and pureplay and other non-store retailers saw their sales grow by 13.8%. All of that suggests an overall interest in doing Christmas shopping online, particularly when discounts are on offer – and early. By contrast, November’s food sales grew by 2.8% on last year.
But it seems very clear that shoppers held off from buying in October in order to buy in November. While online sales across all categories grew by 36.3% month on month, non-food sales were up by 40.7%. The fastest month-on-month growth came in department stores, with sales up by 73.2%, and in fashion and footwear, where sales were 35.7% ahead. Household goods sales were up by 32.7%, and ‘other’ stores were up by 28.7%. Pureplays and other non-store retailers saw their sales rise by 39.3%. Food sales grew less dramatically, at 11.3%, month-on-month.
Growing share of business done online
Fashion and footwear set records for the second month, with 21.8% of sales in the category taking place online – up from the record of 18.2% set last month. Some 19.7% of department store sales were online, while 15.9% of household goods store business was online. Other stores were 12.6% online, while 76.2% of pureplay and other non-store retailing was also online – the category includes groups such as market traders and auction houses. And 5.8% of food sales took place online.
Industry reaction
Vincent Reboul, managing director of Hitachi Capital Consumer Finance, said: “It’s no surprise that online sales are continuing to flourish, grabbing the highest proportion of overall sales for the year-to-date (21.5%) this month. However, recent profit warnings from leading online retailers such as ASOS have demonstrated there are shared challenges for both online and bricks and mortar retailers.
“When it comes to investment, online retailers do have an edge and our own research found that while online retailers can prioritise positive, revenue-generating investment opportunities such as new products (41% of respondents), bricks and mortar retailers are being forced into reactive approaches such as reducing operating costs (44%).”
“Ultimately positive investment should be encouraged, with the ultimate aim for retailers to provide a frictionless journey for all customers, regardless of how they shop.”
ParcelHero’s head of consumer research, David Jinks said: “Online sales took 21.5% of all consumer spending in November. That’s a trajectory we believe will continue to grow rapidly through 2019.”
He added: “ASOS’ gloomy November figures had us all braced for a poor month, especially as it was widely acknowledged Black Friday’s sales had under-performed. However, online sales this November were actually up 13.1% on last November and soared by 36.3% compared to the previous month.” And he said: “Retailers will be giving a small sigh of relief that shoppers did actually spend 5% more this November than in 2017, and 1.5% more than in October; but once again these sales are being driven by online spending. 21.5% of our November pre-Christmas spend was online and our research reveals within a decade half of all our purchases will be online.”
Andrew Westbrook, head of retail at audit, tax and consulting firm RSM said: “Retailers rely on the final ’golden quarter’ to boost their annual revenues and profits – and in some cases to ensure their survival. Given some of the recent warnings, we were expecting today’s figures to be bleak. In fact, they were slightly better than we’d anticipated, with retailers reporting a 5% year-on-year rise in the amount spent by shoppers, reflecting the impact of Black Friday promotions.”
But he added: ’Today’s headline figures mask a disappointing performance from clothing and footwear stores, where the month on month growth in spending was very subdued – up just 0.3%. By contrast, spending on household goods such as homeware, jewellery and leisure goods was slightly healthier rising 1.1%.
“Looking ahead, there continue to be clouds on the horizon. With fewer than 100 days to go before Brexit, and with the Government having triggered their no-deal contingency plans, consumer sentiment could be hit. On the upside, petrol prices are falling and wage growth is now tracking one percentage point higher than price inflation. As a result, consumers may have a little more disposable income to play with. Whether this will translate into higher spending remains to be seen.
“With some retailers experiencing softer than hoped for November sales, many will now be discounting heavily in order to convert stock into sales to ensure their survival going into 2019.”
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