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Retail sales grow overall in January – but a sharp decline in department store ecommerce sales hits non-food online

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Retail bucked the longer-term trend of sales decline in January, with sales up both online and in-store compared to both the previous month and the previous year. But the longer-term trend still points to decline, according to the ONS Retail Sales report for January 2020. Non-food sales fell online in January, driven by a sharp drop in department store ecommerce sales.

How retailers sold online

Shoppers appeared more likely than in previous months to go into shops to buy in January, which is traditionally the month of post-Christmas sales. Online sales grew by 4.9% in January compared to the same time last year, and by 0.9% compared to the previous month. But a slightly smaller proportion of sales was made online in January (19%) than in December (19.3%) and while grocery sales were up online, non-food sales were down by 1.4%, compared to a year earlier, and by 6.8% compared to the previous month.

Online grocery sales grew by 1.5% on last year, and by 5.7% on the previous month, with 5.3% of sales taking place online. 

But department store sales fell sharply compared to the previous year (-14.4%) and were also down by 4.8% compared to the previous month. Some 15.4% of department store sales took place online – with shoppers appearing to go back into stores to make their purchases since overall department store sales grew by 1.6% (see below for sales across channels). 

Ecommerce sales were down at clothing, footwear and textile retailers, both compared to a year earlier (-1.5%) and compared to the previous month (-0.7%). Some 17.3% of retail sales in this category were online. Sales at household goods retailers grew by 0.4% on last year, but fell by 26.7% on the previous month, as 13.1% of sales in the category took place online. Sales at ‘other’ stores, a category which includes electricals retailers, grew by 11.5% on last year and by 2.2% on the previous month. 

Non-store retailers, who are mostly pureplays but also sell via market stalls and auctioneers, saw online sales grow by 9.9% on last year, and by 5.1% on last month. An estimated 79.4% of sales in this category take place online.

How retailers sold across channels

The ONS report estimates that shoppers spent 2.2% more than they did in January 2019 to buy 1.2% more goods, excluding automotive fuel. They spent 1.9% more than they did in the previous month to buy 1.6% more goods. But over the three months to January, shoppers spent 0.5% less to buy 0.8% fewer products – and the report says that “the longer-term trend provides a fuller picture of what is happening in the retail sector”. 

Compared to December, sales in the traditional discount month of January grew for retailers selling food (+1.7%) and non-food (+1.3%), with sales at clothing, footwear and textile stores (+3.9%) growing the most strongly, ahead of department stores (+1.6%). Household goods retailers saw declines (-1.1%) but retailers in other categories (+0.4%) and those, including pure plays, that don’t sell through stores (+2.5%) enjoyed growth. 

But over the most recent three months, all categories were in decline, with the most marked decline among those selling clothing, footwear and textiles (-1.5%), followed by department stores (-1.2%) and household goods stores (-0.5%), with non-store retailing seeing the smallest drop (-0.1%). 

Industry comment

Anne Sheehan, director at Vodafone Business, said: “A number of factors have led to the transformation of the retail sector over the years; customer expectations have shifted with many consumers preferring to purchase goods online than in physical stores; same-day delivery is commonplace; and an always on approach to customer service is required to respond to any and all requests.

“Retailers are now on the cusp of a whole new era. The introduction of technologies such as 5G, the Internet of Things (IoT), Augmented Reality (AR) and Virtual Reality (VR) will drive innovation and new customer experiences; and enable retailers to deliver better value to customers whether in store, at home or on the go – from tailored deals and promotions to uniquely personal in-store experiences.”

Andrew Carlisle, managing director and UK retail consulting lead at Accenture, said: “It seems to be a case of new year, same problems for the UK’s retailers.

“After a difficult 2019 and a mixed Christmas trading period, the retail sector’s struggles have yet to show signs of abating, with declines in retail sales across all sectors, compared with the previous three months. While there was modest sales growth in January, it is not enough for retailed to get excited about.

“The hyped ‘post-election bounce’ has yet to have a tangible impact on consumer sentiment, with trends of prudence and the convenience of online shopping continuing from the Christmas period.”

Image: Adobe Stock

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