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Online sales in retail recorded their largest drop in volume ever, with the high street opening once more. Growth was dipping by -9.1% Year-on-Year (YoY) in May, according to InternetRetailing. Measured against May 2019’s pre-COVID levels, last month’s figures actually represent a +46% increase in sales volume. Meanwhile the Average Basket Volume (ABV) has been rising steadily throughout the year, and now stands at £130.
\n\n\n\nAt a category level, the tide continues to turn on those categories that flourished in 2020 and now face very high YoY comparisons. Electricals (-6.0%), health and beauty (-29.2%) and home and garden (-9.4%) are all down in sales growth. After the previous month’s surge (+35.8%), it also appears consumers have had their footwear fix as sales fell back to -7.3%. On the flip side, clothing continues to perform well (+13.1%). Elsewhere, beers and wine also had a strong month, with growth of +7.5%.
\n\n\n\nAlmost 40% of retail sales took place online in May – the first full month in which non-essential UK shops were able to trade. That’s well below the 61.5% of retail sales that took place online last May, when shops were closed in the first COVID-19 lockdown. However, it is also significantly higher than the 31.4% of sales that were online in May 2019.
\n\n\n\nThis suggests that a greater share of retail sales may now taking place online than before COVID-19. Even now that shops are able to trade once more – and that shoppers may continue to make a greater proportion of their retail purchases online in the future than before the pandemic.
\n\n\n\nWhile the -9.1% Year-on-Year (YoY) drop is technically the biggest in the 21-year history of the index, it can be misleading. This is because it is compared against a huge growth rate last year. The monthly growth between April and May is more revealing. When comparing the same period in 2019 there is a 10-percentage point difference this year. This also happened between March and April. So, there is definitely a slowing down in demand, though from a very high base.
\n\n\n\nA significant drop in Year-on-Year performance in May is not surprising against last year’s heights of online growth. This was accentuated for multichannel retailers (-13.9%) compared to online only (-1.34%) as hospitality has started to open up this month and consumers returned to the shops.
\n\n\n\nIn addition, budget retailers also saw the largest swings, down -12.8%, compared to mid-market (-6.2%) and premium retailers (+0.2%). Consumer confidence has recovered to pre-lockdown levels in May as hospitality venues open up. Ultimately, this is good news for retailers. However, combined with the arrival of warmer weather in June it may see online performance against last year continue to swing to the negative for the next month or so.
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