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UK shoppers spent 19.5% more online in March, but overall retail sales fall

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UK shoppers spent £1bn a week online in March, 19.5% more than they did in the same month last year, official figures showed today.

That total accounts for 15.5% of all retail spending, excluding fuel, during the month, and contrasts with 13.6% a year ago, according to today’s Office for National Statistics’ Retail Sales report for March 2017.

The figures also showed that overall retail sales, which predominantly take place in store, was up by 1.7% in March 2016 compared to the previous year, but down by 1.8% compared to the previous month, February 2017, as average store prices, including fuel, rose by 3.3% – the largest growth since March 2012. That includes the cost of petrol, which rose by 16.4%, year-on-year. The three months to March 2017 saw the first quarterly decline in retail sales since 2013, said the ONS.

Kate Davies, ONS senior statistician said: “Today’s retail sales figures show a decline on the month and on the three months to March, which coincides with quarter 1 in 2017. This is the first time we’ve seen a quarterly decline since 2013, and it seems to be a consequence of price increases across a whole range of sectors.”

Online, the fastest growth came at textile, clothing and footwear stores, where ecommerce sales rose by 28.1% and accounted for 15% of all retail sales in the sector. Food sales grew by 19.2% to account for 5% of retail sales in the category, while department stores saw online sales grow by 13.6% to 13.7% of all spending, and household goods stores saw online growth by 15.9% to 10.6%.

Keith Richardson, managing director retail sector at Lloyds Bank Commercial Banking, said retailers had a “tough” first quarter of 2017, following on from record 2016 growth. He said: “Rising food and petrol prices, together with slowing real wage rises, appear to be finally prompting shoppers to tighten their belts, while the value of the pound continues to put pressure on retailers’ costs. The high street surprised many in recent months by continuing to tempt shoppers with eye-catching promotions even in the face of rising costs, but they can’t keep doing that indefinitely.

“Like Associated British Foods CEO George Weston, many retailers will now be hoping that Brexit provides an opportunity for the UK to reduce tariffs on imports and bring long term costs down. In the meantime, they will need all their characteristic innovation if they are to find a way to deal with higher input costs and domestic rates at the same time as slowing consumer spending.”

James Brooke, chief executive of Amplience , said: “Today’s figures will be harsh a wake-up call for many retailers. With consumers starting to feel the bite of inflation, it’s clear that retailers are going to have to work even harder to drive sales, value and engagement.

“However, while some retailers are struggling to engage consumers, there have clearly been winners. Online sales continue to post impressive year-on-year growth, with fashion and textiles increasing by an impressive 28.1% alone. Forward-thinking retailers know their customer engagement strategies need to evolve – they must innovate, or get left behind. Eighty per cent of all sales now have a digital touchpoint, with instore visits heavily influenced by online engagement. The modern consumer is always online and always connected: flowing across multiple channels, and controlling the relationship with brands. Today’s consumers shop on their own terms – in a visual-social-mobile-first reality. This means retailers must adopt the latest technologies that can easily deliver millions of personalised experiences, continuously fresh content, and proactive streams of engagement that will capture the hearts and wallets of shoppers.”

Hugh Fletcher, global head of consultancy and innovation at Salmon , said: “Shopping trends are shifting and UK consumers are increasingly being turned off the high-street in favour of online platforms such as Deliveroo and Amazon which offer the immediacy now required. The rise of ecommerce has been synonymous with new shopping habits, particularly as shoppers gradually turn to the living room couch as a good-enough replacement to purchase goods and services.

“A shift towards a strong digital strategy is the first step in combatting the decline in the high-street but retailers must increasingly test and embrace innovative technologies such as artificial intelligence, virtual reality changing rooms and Zero UI (the move away from physical interactions in favour of sound, movement and other senses). These are just a few examples of the latest digital trends that will continue to impact and evolve the industry. As consumers shift online, retailers must too embrace the change in shopping habits and feed consumers’ desire for convenient online shopping or face the dark prospect of poor sales, profit slumps and sluggish growth.”

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