Online Shopping Boosts Retail Sector

Published: 14 January 2014

ONLINE sales during December grew at their fastest rate for almost three years underlining suggestions the salvation of the retail sector may lie away from the traditional High Street. Latest figures from the British Retail Consortium show online sales of non-food products in the UK grew 19.2% in December compared to a year earlier. In December 2012, they had increased by 18.4% over the previous year.

In December, online sales represented 18.6% of total non-food sales within the products monitored by the BRC. This compared with 16.5% in December 2012. December’s online growth was the strongest during 2013 and the best since March 2010. Online sales contributed 2.4 percentage points to the growth of non-food total sales. In the last three months, the contribution averaged 1.9 percentage points – nearly three-quarters of the total non-food growth.

Overall UK retail sales were up 0.4% on a like-for-like basis from December 2012, when they had increased 0.3% on the preceding year. On a total basis, sales were up 1.8%, against a 1.5% increase in December 2012, the lowest growth of 2013. However, the three-month average total growth was 2.2% against 2.8% for the 12-month period, confirming the recent slowdown in sales and consumer confidence. It is one of the reasons why many retailers began sales early although even this failed to improve the performance of some – department store chain Debenhams for one. It was forced to issue a profit warning after a poor festive performance and may have to offer discounts until well into February to clear old stock.

Of the segments that performed well, Health & Beauty and Clothing had a strong finish to the year, while other non-food was the strongest contributor to sales growth in December and the fastest-growing category in 2013.

Helen Dickinson, Director General, British Retail Consortium, said: “This is a respectable result overall, in line with our prediction that Christmas trading in 2013 would reflect that while confidence levels were higher than the previous year, this wasn’t always matched by more money in pockets.

“The last-minute rush also arrived as expected, giving a major boost to sales in the final few days before Christmas after a fairly flat showing mid-month.

“Multichannel is the other big story of the season. This Christmas we’ve seen innovative retailers using click and collect and other approaches to make a virtue of both their website and their physical shops. And that’s something we see growing in importance. Fast deliveries and social media offers have also helped us to plan ahead and cover off our Christmas lists efficiently.”

In non-food, she said toys and electricals were key battlegrounds, with customers responding well to competitive offers on festive ‘must-haves’.

“With budgets still under pressure, many shoppers economised where they could to afford a little luxury here and there, and practical gifts such as bedroom furniture, children’s clothing and kitchen appliances also proved popular.

“Overall, this result meets expectations and draws to a close what has been a year of encouraging but fragile recovery. Retailers will be hoping that a good response to new ranges coupled with a continuing boost from post-Christmas sales events gets 2014 off to a promising start,” she added.

Simon Walton is a Partner and Head of the Retail & Consumer Practice at Berwick Partners.

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