Stores bear brunt of slowdown as online takes increased share of sales

According to figures from the British Retail Consortium (BRC) and KPMG, online took its largest share of non-food spending yet over the past three months.

Covering the four weeks from January 1 to 28, the figures show that online sales of non-food products in the UK grew 8.0% for the month versus a year earlier, when they had increased by 14.9%.

Over the three months to January, online sales of non-food products in the UK grew 8.6% year-on-year. Over the same period, total non-food sales in the UK grew 0.3%. Over the three month period, £1 in every £4 of non-food sales was spent online.

The message of growth is a contrast to in-store sales. Over the three months to January, in-store sales fell, posting declines of 2.2% on a total basis and 2.4% on a like-for-like basis, the deepest since the BRC’s online monitor started in December 2012.

BRC chief executive Helen Dickinson OBE commented: “Online channels achieved the highest share of total non-food retail spend on record in the three months to January, despite the 8% growth being somewhat below the trend of late. In fact, the rolling twelve-month average growth to January 2017 is the lowest since the monitor began in 2012, falling below double-digits for the first time.

“As with total sales, online sales in January were set against a strong comparative period, as January 2016 recorded the highest growth of last year. However, with £1 in every £4 of non-food spending being spent online consistently over the last three months, this provided enough momentum to largely shield online growth from the slowdown of non-food sales overall. It was stores that bore the brunt of the slowdown, posting their deepest three-month decline on record as the demand during retailers’ clearance sales was predominantly online.

“As the clearance events came to an end, full price items didn’t attract the same demand, echoing a sense of caution from consumers and ultimately resulting in a quiet end to the month for many retailers.”

KPMG UK head of retail Paul Martin added: “Unlike the chilly high street, online retail sales continued to grow in January, with non-food online sales up 8% compared to last year. The month’s cold snap is likely to have encouraged high street hibernation, with shoppers preferring to browse from the comfort of their own homes.

“Indeed, consumer focus really did turn indoors during the month, with sales of furniture and other household items performing particularly well.

“Online retail channels will continue to grow in popularity, and with increased pricing pinching the consumer purse, retailers will need to balance price, personalisation and customer experience seamlessly in order to grab the attention of their customers.”

Commenting on the figures, Salmon global head of retail Patrick Munden said: “News that sales last month slipped highlights the change in consumer shopping patterns, and that January is no longer the peak shopping period it once was. In previous years, January would see strong sales thanks to retailers holding off discounts until after Christmas and during the January sales. Now however, with the emergence of Black Friday, Cyber Monday and the subsequent sales weeks in the run-up to Christmas, we have seen the development of a much longer sales period, reducing the need for shoppers to maximise their efforts in the January sales.

“Although it may appear that there is an increasing fatigue of January sales for shopping, consumers actually have more choice and more time than ever before to purchase goods at a discounted rate – even retailers such as Amazon are creating their own, what we call ‘Proactive Peak’ periods, such as ‘Prime Day’. What we are seeing more generally now is a dispersing of consumers across the weeks running up to Christmas and following it, rather than the large rush in January which would have been expected only five years ago.”