Multichannel retailers dominated online sales in December

Online players that have physical retail outlets dominated online sales in December, new figures have shown.

Data from the Office for National Statistics (ONS) revealed that retailers with a physical presence continued to increase their online spending and were the largest contributor to the overall growth seen in December 2017.

Online sales continued to increase as a proportion of all non-seasonally adjusted retailing in December 2017, now accounting for 18 per cent of all retail, up from the December 2016 figure of 17.1 per cent.

Year on year, total online retailing increased by 9.4 per cent, which continued the pattern of growth, but at a slower pace than previous months.

The main contributor to this slowdown was non-store retailing, which slowed to 3.7 per cent in December 2017 having experienced a boom in sales over the past two years.

However, it was still the largest contributor to the proportion of spending online, accounting for 79.4 per cent of all money spent in internet sales.

In December, the quantity bought through all retail channels decreased by 1.5 per cent compared with strong sales in November.

This suggested a shift in Christmas shopping in recent years, the ONS claimed, as consumers seemed to be starting their purchasing earlier in line with Black Friday promotions.

However, compared with December 2016, the quantity bought increased by 1.4 per cent, with positive contributions from all stores except food stores.

For the whole of 2017, the quantity bought grew by 1.9 per cent, which was the lowest annual growth since 2013.

In the three months to December, the quantity bought increased by 0.4 per cent, compared with the previous three months. However, this was the weakest quarterly growth since the decline of 1.2 per cent in Q1 last year.

Rhian Murphy, ONS senior statistician, said: “Retail sales continued to grow in the last three months of the year, partly due to Black Friday deals boosting spending.

“Consumers continue to move Christmas purchases earlier, with higher spending in November and lower spending in December than seen in previous years. However, the longer-term picture is one of slowing growth, with increased prices squeezing people’s spending.

“Over the year, the proportion of internet spending is continuing to rise, with almost one in every five pounds spent online by the end of 2017.”

Rupal Karia, managing director of the commercial sector at Fujitsu UK and Ireland, commented: “It is fair to say that retailers have a tough market to navigate. High-street figures are at their worst in five years, and it’s clear consumers are wary of spending their money as inflation exceeds UK average wage growth, causing prices to increase and purse strings to tighten. Consumer spending habits aren’t what they once were and retailers cannot rely on what worked before or their heritage to get shoppers through the door anymore.

“It isn’t all bad though, and we did see some success from retailers over the Christmas period. Interestingly, the retailers that did well had a strong multichannel offering as their differentiator for success. We have found that consumers want and will shop with brands that offer a better technology experience in-store. What’s more, three-quarters go as far as saying that if Amazon had a physical store, it would become their preferred place to shop.

“This year is likely to be a tough one for retailers, with consumers uncertain about the future thanks to a turbulent economy. But with the right innovations, it could help foster a year of success and growth. Retailers should look at how they can adapt their offerings for customers, from collaborating with other retailers that complement each other and open them up, to a new flurry of customers and footfall – investing in their mobile operations to ensure they are facilitating a journey, which for consumers starts on their phones, and thinking about how to truly create personal connections with their customers which make them return to time after time. It is a battlefield out there to win over consumers’ hearts and loyalty, and retailers need to ensure that they are customer centric, providing them with the services and channels they want, if they are to cut through what is a very noisy market.”