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Shoppers cut back online and across sales channels in August as prices rise: ONS

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Shoppers cut back last month as prices rose, the latest official retail figures suggest. They spent less online, compared to both last year and the previous month, according to the ONS Retail Sales report for August 2022. Across sales channels, they spent more to buy less than a year ago. They also spent less than in the previous month. 

Online sales were 9.5% lower than a year earlier, and 3.6% lower than the previous month of July 2022. The household goods category saw the single sharpest fall (-16.3%, year-on-year), while the only rise was at in ‘other’ stores (+0.1%), a category that ranges from electricals to jewellery, bookshops and toyshops

Just over a quarter of UK retail sales took place online in August, the latest ONS figures suggest. It estimates that 25.7% of sales were online. That’s down from 26.3% in July 2022, but still ahead of pre-pandemic levels. Some 19.8% of retail sales were online in February 2020. 

An estimated 74.3% of UK retail sales took place in shops. Across sales channels, shoppers spent 3.7% more on UK retail in August 2022 than a year earlier to buy 5% fewer goods, excluding automotive fuel. They spent 1.4% less than in July 2022 to buy 1.6% fewer goods.

“Feedback from retailers suggests that consumers are cutting back on spending because of increased prices and affordability concerns,” says the ONS in today’s report. RPI (inflation as measured by the retail prices index) was running at 12.3% in August, according to ONS figures.

How shoppers spent online

Ecommerce was down across all categories, with the exception of a small month-on-month rise (0.1%)  in ‘other’ stores. The largest fall was in household goods (-16.3%, year-on-year). 

Some 8.9% of food sales took place online, down by 12% on the same time last year, and 0.2% on the previous month. 

More than a fifth (21.3%) of non-food sales were online, following a 9.7% year-on-year fall, and a 2.4% month-on-month fall. 

Most (83.7%) trade at non-store retailers – primarily pureplays – took place online. Ecommerce sales in the category were 8.6% lower than a year earlier, and 5.3% lower than a month earlier. 

Clothing, footwear and textiles remained the category that is most online, making 25.8% of sales via ecommerce. That’s down both on a year earlier (-7.4%) and on a month earlier (-2.9%). 

Department store sales were 22.4% online, but shoppers spent less than last year (-4.2%) and then the previous month (-2.5%).

Household goods, where sales were 22.1% online, saw the largest single drop, falling by 16.3% a year earlier, and 9% on the previous month. 

‘Other’ stores, where sales were 16.7% online, saw sales fall compared to a year earlier (-11%) but rise slightly (+0.1%) on last year. The category ranges from electricals retailers to jewellery, bookshops and toyshops. 

How shoppers spent across channels

Month-on-month sales in all of the main sectors, from food (-0.3%) to non-food (-0.7%) to non-store retailing (-0.4%) fell over the month, for the first time since July 2021 – the month that saw legal restrictions on hospitality were lifted. They also fell, month on month, in all non-food sectors, from department stores (-2.7%), ‘other’ stores (-2.8%), such as sports equipment and toy stores, to clothing (-0.6%), and household goods (-1.1%) – with falls in this category led by furniture and lighting.

Compared to pre-pandemic February 2020, shoppers spent 12.4% more to buy 1.6% more goods.  

Industry comment

“Retail sales fell sharply in August as the cost-of-living crisis deepened,” says Melissa Minkow, director, retail strategy at digital transformation specialist CI&T. “With winter on its way and energy bills set to rocket, consumers are tightening their belts. People are wary of what is to come, so spending on non-essential items is now few and far between for many.

“For this reason, Black Friday will carry greater significance this year. Extreme inflationary pressures mean retailers are less able to offer discounts on high-demand goods over a sustained period, as they’ve done in previous years int he built-up to the retail event. This year, a one-time only discount exclusive to the weekend will be a key strategy, appearing to consumers with tighter budgets who are holding out for as long as they can to cross off Christmas shopping, and who are keen to take advantage of only the biggest discounts.” 

Brian Atkinson, vice president and general manager EMEA at contact centre specialist Five9, says: “With winter on its way and higher energy bills to pay for, retailers face a major challenge on their hands as they balance growing pressures with trying to shield consumers from further price rises. Despite this, brands can still reap the benefits of the Golden Quarter ahead. With Black Friday, the World Cup and the Christmas shopping period on the horizon, these are key opportunities to attract footfall – especially to high streets – and drive sales.”

Gert-Jan Wijman, VP, EMEA at digital integration business Celigo, says: “As expected, the cost-of-living crisis has driven consumer spending downwards as cash-strapped households have burnt through their pandemic savings and have made cuts to non-essential goods and services. 

“It’s an unfortunate reality that retailers will need to grapple with as the UK teeters toward a new recession. More than ever before, it’s imperative for retailers to find ways to be more efficient, resilient and robust, lest they fall prey to the challenging market conditions that are set to persist for the foreseeable future. Naturally, cost-cutting is going to be at the forefront of many business owners’ minds, as they look for ways to recoup losses and minimise the impact of soaring energy bills. Instead, however, it is important to continue investing in technologies and solutions like automation that can save time, effort and ultimately costs across the business.”

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