Online shopping habits are a ‘permanent’ change

Shopping habits acquired during lockdown appear to have been adopted permanently, experts have warned, as physical stores continue to struggle, despite another month of retail growth overall in August.

Online shopping habits acquired during lockdown are permanent, experts warned.

The British Retail Consortium (BRC) said UK retail sales increased 4.7 per cent on a like-for-like basis last month, driven by furniture and electronics as people continue to work from home.

However, sales in physical stores remained in decline as workers remained away from city centres and continued to shop online.Online non-food sales, meanwhile, rose by 42.4 per cent, against a growth of 1.6 per cent at the same time last year, increasing the proportion of non-food sales made online from 29 per cent of all sales in August 2019 to 39.3 per cent this year.

The BRC report found that over the three months to August, in-store sales of non-food items declined 17.8 per cent on a total and 8.5 per cent on a like-for-like basis - lower than the 12-month total average decline of 18.4 per cent.

Helen Dickinson, chief executive of the British Retail Consortium, said: “Despite another month of growth in August, retail sales remain down overall since the start of the pandemic. Remote working has continued to help sales in home goods, such as food, computing, furniture and TVs.

“Lockdown also appears to have permanently changed some consumers’ shopping habits, with online sales continuing to boom despite shops reopening in June. Meanwhile, city centre retailers continue to be devastated by low footfall and poor sales, as office workers stayed away for yet another month.#

“Many retailers are continuing to struggle, particularly those in clothing, footwear and beauty, that are reliant on high footfall locations. With rents accumulating, and the September quarter payment date fast approaching, many retailers are hanging on by a thread.”

Paul Martin, UK head of retail at KPMG, which co-authored the report, said: “Whilst welcome news, the coming months are far from problem free, with economic uncertainties – including the unwinding of the furlough scheme – likely to leave many consumers thinking carefully about their spending priorities.

“The online channel remains prominent, with penetration rates still high at 39.3 per cent for non-food. Indeed, the vast majority of online categories realised significant growth in August. Clearly retailers have some serious thinking to do around what the future of the industry is going to be exactly.

“While the overall online penetration rate has declined in recent months, the significant acceleration of the channel is here to stay. With this in mind, retailers need to focus on the cost of doing business, as online is generally more expensive to operate.”

The figures come as a separate report from a company which tracks one in four of all UK card transactions said its data also showed a return to consumer spending growth in July. Cardlytics said that spending growth peaked at +5 per cent during the week commencing 16 July compared to the same period last year, before levelling out at just over one per cent growth in the week commencing 23 July. Spending growth was driven by sales of toys, sports and outdoor equipment, as well as pet supplies and home renovations.

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