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Online sales grow as shoppers stay away from stores

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Online sales grew strongly in March, as snowstorms and rain combined with changing shopper behaviour to deter visits to high street stores, new figures suggest.

 

Shoppers spent 13.3% more online in March than they did a year earlier, according to the Office for National Statistics’ Retail Sales report for the month, which also found that across all retail, when petrol was excluded, shoppers spent 3.2% more in March, buying 1.1% more goods than they did a year earlier. But sales fell by 1.2%, when petrol was included, compared to the previous month, while three month sales were down by 0.5%.

 

Figures from etail trade association the IMRG found an 18.9% rise in online sales. That’s well ahead of the three month trend of 15.4% growth, and 12-month trend of 12.8% growth.

 

IMRG put the sales rise down to factors including the snowstorms dubbed the ‘beast from the East’ and the early Easter bank holiday weekend – which led to a 27% spike in sales in the last week of the month. Figures out earlier this week showed that footfall was down by 6% in March.

 

Andy Mulcahy, strategy and insight director at IMRG, said: “It’s possible to read this month’s results as a simple story of online continuing to benefit from the decline of the high street – which is nothing new of course, but it may be that we are seeing an acceleration of this as we’ve moved into 2018. At the same time it could just be a blip – Easter falling in March will likely have pushed up online growth (and, by extension, it may come in far lower in April) plus the weather has at times brought heavy snowfall and prolonged rainfall.

“If the strong growth is sustained into April, it would be tempting to conclude that we may have entered a new retail era – where store portfolios are going to be reduced faster under a far more radical programme of store consolidation than we have seen thus far, with digital transformation going high up board agendas and more ‘digital transformation director’ job titles appearing.

 

"But what does that mean for the high street? It’s important to remember that shopping centres have generally performed better than high streets recently, so it’s not that physical retail spaces can’t work. The question is – if retail were to start again entirely from scratch tomorrow, what would a retailer’s physical space look like? Would they be shops in the traditional sense, using all the space to market stock? Would we actually even create high streets again?”

 

ONS senior statistician Rhian Murphy said snow helped push up online sales at a time when a drop in petrol sales, as people stayed at home, meant sales fell over the three months to March.

 

She added: "However, the snow actually helped boost online spending with department stores in particular seeing growth in their web sales.”

 

Department store online sales grew by 33% during the month, the ONS figures estimated, accounting for 17.1% of all retail sales made in the category. Household goods sales rose by 19.4% online, to account for 12.8% of sales in the category. Online textile, clothing and footwear sales grew by 6.8%, and made up 16.2% of all sales. Online food sales grew by 6.1%, accounting for 5.4% of all sales in the category.

 

Meanwhile, the IMRG figures showed strong online growth in the beer, wine and spirits, electricals and clothing sectors.

 

Bhavesh Unadkat, principal consultant in retail customer engagement, at Capgemini, said:

 

“While the comparatively stronger growth of multi-channel retailers this month further supports the weather’s role in driving footfall away from the high streets, it also highlights the potential value and relevance of maintaining some form of physical presence in addition to a digital one.

 

The trick for retailers is to figure out how the two can successfully work in combination, and what role each must play. We’re already seeing the start of this interplay in the trend for showrooming, but that is just one possible innovation of many.

“Regardless of a probable uptick in high street sales as the months warm up, this isn’t a calculation retailers can afford to push to the back of their minds till Autumn. Not only is the British weather far too unreliable for such optimism, but all the signs point to this being part of a much more intrinsic change in consumer behaviour that continues to gather pace. For those retailers who fail to evolve their approach fast enough, the gap in fortunes is only going to widen.”

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