Shoppers returning to stores spent more to buy less in the peak trading month of November – and spent less online, the latest official figures suggest.
While spending – excluding automotive fuel – was higher in November compared to both the same time last year and the previous month, shoppers bought fewer goods, the ONS Retail Sales Report for November 2022 suggests. Online sales were 5% lower, by value, than a year earlier, with sales at ‘other’ retailers falling particularly sharply compared to both last year and the previous month – although department stores and household goods retailers both saw month-on-month rises in spending. Across retail channels, sales at computer stores and at secondhand goods stores were down on last year, the report finds.
How shoppers spent across channels
Shoppers continued to spend more in November to buy less, following a trend that first became apparent during 2021 since when the gap between money spent and goods bought has widened steadily. In November, they spent 3.6% more than they did a year earlier to buy 5.9% fewer goods excluding automotive fuel. They also spent 0.7% more than the previous month to buy 0.3% fewer goods, again excluding fuel.
Shoppers bought more food (+0.3% by volume) than a year earlier, but across non-food categories, shoppers bought 0.2% fewer items than a year earlier, 0.6% less than in October, and 1.8% less than in pre-pandemic February 2020. Clothing sales volumes are 2% below their February 2020 levels, but 2.1% higher than in October, following growth in footwear sales.
The period covered by the November ONS Retail Sales report runs from October 30 to November 26, so includes Black Friday but not Cyber Monday. ONS analysis shows an annual peak around the run up to Christmas that appears to be, as yet, less pronounced this year. The ONS generally adjusts its figures for seasonal variations but shows that when sales volumes are not seasonally adjusted they were 11.4% higher in November than in October. When they are seasonally adjusted, sales volumes fell by 0.4% between October and November 2022.
How shoppers spent online
Shoppers spent 5% less online than they did a year earlier, although they spent 0.6% more than they did in the previous month of October. An estimated 26.2% of sales took place online, continuing at a level now seen since May 2022. That’s lower than during pandemic peaks – when shops were closed or shoppers were wary of visiting on health grounds – but more than in pre-pandemic February 2020, when 19.6% of sales were online.
Food sales were 4.8% down on a year earlier and 0.5% higher than the previous month. Some 8.9% of sales in the category were online.
Across non-food categories, sales were 5.6% lower than a year earlier, but 0.2% higher than the previous month. Just over a fifth (21%) of sales were online.
Spending was at a similar level across most categories, with department stores and household goods retailers seeing the strongest month-on-month growth – and ‘other’ retailers selling the sharpest falls.
Spending at department stores – where 23.3% of sales took place online – was flat on last year but 4.2% higher than in October. And household goods traders saw sales fall by 5.1% on last year but grow by 4.4% on the previous month. Some 22% of sales in the category were online.
Clothing, footwear and textiles continue to be the category that is most online, with 24.7% of sales in the sector made over the internet. Sales were 2.9% lower than a year earlier, but 1.6% higher than the previous month.
The ‘other’ category stretches from electricals to jewellers, toyshops and bookshops. It saw sales fall by 12.8% on a year earlier, and by 7.3% on the previous month. A lower proportion (16.1%) of sales in this category were online.
Non-store retailing, the category that is dominated by pureplay retailers – with 91.4% of sales taking place online – but also includes market stalls and auctioneers, saw sales fall by 4.7% on the previous year but grow by 0.9% on October.
Sachin Jangam, partner for retail at Infosys Consulting, says: “Lowering prices only works as a short term solution, but even then with Black Friday weekend this wasn’t enough to boost November sales overall. It’s likely we’ll see a fall in retail prices in the new year as fashion and specialty retail brands hope to clear off seasonal inventory in Boxing Day and January sales. However, this is not a long-term fix. Inflation is predicted to remain high for the next couple of years, and there is only so much cost that retailers can absorb before they become unprofitable.
“As we enter the new year, competitiveness will be the focus for retailers and supermarkets. This means optimising costs where possible and becoming more agile when it comes to changing the inventory mix in stores. For example, aligning consumer demand with data-driven store assortment to support availability and maximise profit per square foot. Retailers should also focus on price match schemes, as these are a real differentiator as pockets are squeezed, whilst negotiating hard with suppliers to keep prices down on the back-end.”
ParcelHero’s head of consumer research David Jinks says: “Looking at the overall parcel volumes for late November we feared Black Friday had been something of a clunker, and that seems to be the case. Experts had been talking of a 0.3% uplift in sales in November but that certainly didn’t happen. Perhaps even more concerning, even though Brits bought fewer items in November, we actually spent 0.5% more than in October, and 4.2% more than in November 2021. That’s the impact of galloping inflation – and also indicates there were fewer bargains around over this year’s long Black Friday period.
“The gloss has certainly been taken off Black Friday sales. There was a notably lower seasonal spike in sales this November, compared to 2021, and online sales suffered as a result. The value of goods we bought online this November collapsed by -5% compared to last year, even though we actually spent 0.6% more than in October – reflecting the lack of great Black Friday online discounts. Online sales did manage to cling to their 26.2% overall share of the entire November retail spend, however. That’s been the case since May and shows that, at least, we now know the new ‘normal’ for online shopping post-pandemic. The only crumb of comfort we can offer retailers is that the volume of parcels booked this week through ParcelHero has spiked significantly. We may be experiencing a late jump in online spending as shoppers brace themselves and reluctantly start last-minute Christmas shopping.”
Samantha Mansfield, head of strategy experience and commerce at Merkle UK, says: “The latest figures come as a surprise, as many hoped shoppers trying to bag the best deals in the run up to Christmas would drive up sales. The cost of living continues to bite, signalling a less than festive season ahead, with consumers’ budgets tighter than ever.
“The next few weeks will be critical for retailers to show true value to their customers amid ongoing strike action threatening both online and brick-and-mortar sales. While price wars offer a good short-term solution to draw in savvy shoppers, more is needed to lay the grounds for a successful future. Our new research found that over three-quarters of consumers (76%) expect businesses to work hard to retain them once the cost-of-living crisis is over, showing that their loyalty during a crisis must be rewarded.
“Meeting consumers’ ever-changing expectations is now the biggest challenge for brands. The stakes are getting higher, but retailers must cater towards these demands now, or risk falling by the wayside.”
Andrew Busby, retail industry lead at Software AG, says: “November’s fall in retail sales comes despite consumers eyeing Black Friday discounts for their Christmas shopping spend. In the run up to Christmas, the retail landscape looks hit-or-miss. Savvy consumers may be searching for those last-minute bargains, but train strikes are hitting major retail destinations hard and jeopardising in-store footfall. Royal Mail strikes, however, could have the opposite effect, driving this footfall as pre-Christmas delivery is now uncertain.
“Despite this, there mustn’t be a trade-off for retailers between prioritising in-store or online shopping. Both are essential to customer experience, and both can be done by making sure the right level of stock is in the right place at the right time, using technology like IoT and AI to help forecast demand and monitor inventory levels.
“The months ahead will continue to be tough as winter bites and the financial hangover from Christmas and New Year really starts to be felt in the pocket. We should expect an increase in Buy Now Pay Later (BNPL) transactions as people try to spread the cost, as well as an avalanche of returns from post-Boxing Day sales, as consumers scrutinise their purchases to new degrees.”
Melissa Minkow, director, retail strategy at CI&T, says: “The fall in retail sales for November is a sign of the times and demonstrates the financial strains on consumers right now. Despite Christmas around the corner, this is also a tricky time for retailers as they navigate the impact of strike action and delivery delays for customers. Some brands have chosen alternative delivery services, signalling that it is possible to still find ways to get customers their holiday items on time, while leveraging businesses where workers are happy – and it’s likely other retailers will follow suit.
“Now is a good time for brands to focus on the in-store experience, driving people through the doors by promising a fun shopping outing, while eliminating the risk of not receiving presents in time for Christmas.”