Retail Insights

Shoppers choose stores to hunt for bargains as online slows in January

Retail Economics estimates total online sales rose by 10.4 per cent in January, year-on-year, compared with growth of 12.3 per cent in January 2015. Growth was below the 12-month average of 11.3 per cent. While January’s performance is not disappointing, strong total retail sales over the period cannot be solely attributable to online.

It appears that consumers were out in force across high streets, shopping centres and retail parks in the search for bargains during the seasonal sales period. Lower online growth may also suggest less post-Christmas discounting online compared with stores. Furthermore, the impact of Black Friday over the last three years may have changed the emphasis on sales and promotions to pre-Christmas, rather than post-Christmas, particularly for online.

Nevertheless, stronger footfall across physical channels was supported by the latest data from Springboard which estimated a 1.2 per cent rise in January, the strongest since January 2014. Retail Parks (+5.2 per cent) saw the strongest performance, followed by High Streets (+0.2 per cent) while Shopping Centres were flat. Accordingly, store sales were robust, estimated to have risen by 1.2 per cent in January, outpacing the 0.5 per cent average for the last 12 months.

Chart 1

Source: ONS, Retail Economics analysis

Online sales growth was particularly strong across Household Goods, according to the ONS, rising by 32.6 per cent, year-on-year, compared with 14.7 per cent in January 2015. Average online weekly sales averaged £834 million in January, according to the ONS. This accounted for 13.9 per cent of total retail sales, up from 12.8 per cent in January 2015.

Chart 2

Source: ONS, Retail Economics analysis

Overall, January was a very strong month for total retail sales but online sales were not the key driver underlying growth. While underlying momentum remains firmly with online, it appears that, when consumers are in the mood, they are prepared to hit the high streets which was evident in the growth of store sales this month.

However, the role that digital plays in supporting online and off-line sales growth is undeniable. A simple comparison of Online vs. Store sales must be interpreted with caution. The popularity of click-and-collect, the use of tablets and digital screens in-store and the incentive for shop floor staff to encourage customers to use online as a means to access extended ranges all muddy the waters.

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