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Half of June’s retail sales online for the first time, as ecommerce helps drive the industry’s fastest growth for two years: BRC

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Half of June’s retail sales online for the first time, as ecommerce helps drive the industry’s fastest growth for two years: BRC

Turbocharged online growth drove best set of June retail sales figures for more than two years, according to figures from the British Retail Consortium (BRC) today. For the first time, more than half (50.7%) of all retail sales took place online, up from 33.1% a year earlier.

 

But news of the rise came with warnings that the strength of online sales should not obscure the danger still facing retailers with shops and in sectors including clothing, footwear and health and beauty.

 

Online sales growth

Non-food online sales grew by 48.2% in June, compared to the same time last year, driving 3.4% growth in total retail sales, according to the BRC-KPMG Retail Sales Monitor for June 2020, which covered the period from May 31 to July 4.

 

Like-for-like sales, which strip out the effect of temporarily closed stores but include online sales, rose by 10.9% year-on-year. The BRC says this was the result of strong online sales, which grew well ahead of the 12-month average of 17.1% growth.

 

A year earlier, to set the figures in context, online sales grew by 3.3% in June 2019, total sales fell by 1.6% and like-for-like (LFL) sales fell by 2.2%. This month’s total growth is the highest since May 2018, and the first growth seen since the lockdown started.

 

Helen Dickinson, chief executive of the BRC, said: “June finally saw a return to growth in total sales, primarily driven by online as a result of lockdown measures being eased and pent up demand being released. Despite footfall still being well below pre-coronavirus levels, average spend was up as consumers made the most of their occasional shopping trips. Computing, furniture and home improvement all continued to do well as the public invested in home comforts and remote working. However, while categories such as food performed strongly, not all retailers can breath a sigh of relief, with clothing, footwear and health and beauty still struggling. All eyes on now on next month, now that pubs, restaurants and cafes have reopened, in the hope it brings a much needed boost to our high streets and shopping centres.

 

What’s happening in-store

But while online sales grew quickly, in-store sales fell just as sharply. In the three months to June, in-store non-food sales fell by 46.8% in total. This is worse than the 12-month total average decline of 16.5%. When figures from temporarily closed stores were discounted, LFL sales were 11.3% behind the same time last year. But when online sales were factored in, non-food retail sales fell by 15% in total, and grew by 9.5% LFL. That suggests online sales helped to compensate for the temporary closure of non-essential stores but overall sales still fell well short of last year.

 

Dickinson said: “Though a month of growth is welcome news, retail is not out of the woods yet. The pandemic continues to pose huge challenges to the industry, with online stores closures and job losses across the UK. The reopening of shops is an important step on the road to recovery, but with months of rent building up, many shops will be forced to close unless action is taken before the next Quarter Rent Day. The government must remain open to further action to boost consumer demand and should take steps to support with rent costs or the industry could suffer thousands of avoidable job losses.”

 

The headline growth figure reflects growth from food as well as from online non-food sales. Shoppers spent more on food, with sales up by 3.8% in total, and by 7.3% LFL. That’s ahead of the 12-month total average growth of 2.7%.

 

Paul Martin, UK head of retail at KPMG, said the challenges and longer-term consequences facing the retail industry had not disappeared in the current post-lockdown boom, which comes as shoppers buy to make post-lockdown life more comfortable.

 

“Fashion sales haven’t rebounded quite as impressively though, despite reports of increased interest from those prepared to queue to enter stores,” he said. “Online sales – while still in a high gear – are cooling a little as high street activity picks up again slowly and cautiously. That said, whether consumers will forego the convenience of online shopping now that they’ve become accustomed to it remains a fundamental question for the future.

 

“Retailers won’t be picking up where they left off and months of reduced or no sales will threaten the survival of many. The pandemic has significantly changed consumer behaviour. It’s therefore vital that routes to market and ways of working are adapted with that fact in mind.”

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