The internet’s share of UK retail sales hit record levels in February as pandemic restrictions on non-essential stores helped to accelerate the online spending trend.
More than 36p in every pound was spent online last month, according to the latest data from the ONS (Office for National Statistics) as the proportion of all UK sales spent online reached a record 36.1%. This was up from 35.2% in January and 20% in February 2020.
As Shares notes in this week’s sector report, consumer confidence picked up in March to a one-year high, according to GfK, and retail sales should receive a substantial lift from the re-opening of non-essential retailers from 12 April.
The digital retail data masked an otherwise slow return of consumer spending as the retail recovery limps forward. UK retail sales rose 2.1% month-on-month in February with non-essential stores remaining closed.
This showed a firm bounce after January’s sharp 8.2% slump, signaling improving confidence among UK shoppers, although the ONS pointed out that sales were still down by 3.7% year-on-year.
FASHION SALES RIPPED APART
Clothing retailers have been hit the worst over the past year, with sales volumes plunging 50.4% versus February 2020, before the first national lockdown.
According to today’s ONS update, non-food stores provided the largest positive contribution to the monthly growth in February 2021 sales volumes, boosted by strong increases of 16.2% and 16.1% in department stores and household goods stores respectively.
WHAT THE ANALYSTS ARE SAYING
Commenting on the ONS retail sales figures, Danni Hewson, financial analyst at AJ Bell, said: ‘The tantalising prospect of being able to share a garden with friends and family has helped bump retail sales up slightly after the January slump.
‘Household goods sales were up 16% mainly thanks to purchases of outdoor products as gardens get a makeover ahead of lockdown restrictions easing. Unsurprisingly online sales from those retailers received the biggest boost, a record monthly bump for the sector of almost 36%.
‘And that’s repeated across the board with the amount people are spending online at a record high of 36.1%. Compare that share with the 20% enjoyed the previous February and it reinforces what all retailers know in their bones, lockdown has sped up already changing habits.’
Hewson added that the decision by John Lewis to shutter a further eight stores indicates the retailer doesn’t expect that trend to reverse. ‘But all retailers will take comfort in these figures. Consumers clearly want to spend, they just need the right conditions; a fine sunny spring would undoubtedly help that along.’
Elsewhere Ian Geddes, head of retail at Deloitte, said: ‘Modest month-on-month growth across total retail sales (ex. fuel) points to growing optimism as consumers increased their spending despite the UK remaining under lockdown. However, with many still working from home and limited permitted opportunities to meet socially, clothing and footwear sales are below where they should be at the start of a new season.
‘February’s announced roadmap out of lockdown will have boosted consumer confidence. At the same time, fewer spending opportunities over the last year has improved savings for some. Those with greater disposable income are poised to spend, with pent-up demand likely to see an enthusiastic return to high streets as restrictions ease.’
