Internet Retail Sales Subdued as Bricks & Mortar benefit from Good Weather in July

It’s the third Thursday of the month so The Office for National Statistics (ONS)  published the monthly retail sales figures for July today (pdf) Full details  are available on the ONS site.

The overall figures of a 1.1% increase was almost double expectations and were hence very favourably received to the extent that warnings of some possible overheating was mooted. Basically the exceptionally warm weather cheered us up brought us out & made us buy more mainly in supermarkets.

Our Internet sales headlines:

  • Internet sales dipped just below the 10% level (9.9%) of all sales for the year to date and at 9.5% in July were the lowest month this year
  • Online food sales at 3.2% of all food sales were somewhat below their recent record levels of around 3.6%. On a year to date basis they stand at  3.4%
  • For every £1 spent in the online retail sector 47 pence was spent on non-store retailing 37 pence in non food stores and 16 pence in food stores!
  • All internet sales excluding food dropped back again to 15.1% (15.6%) and have now been within a range of 15% -17% since November last year.
  • The decline in the rates of growth of the major online only retailers noted in previous months whilst likely reversed dipped again this month to 13.9% the first month its been in the teens this year. After a 4 month lull it looks as if we are returning to the average of around 20% or more as recorded since the statistics were first compiled. These figures include the online sales of all the majors ie  Apple, Google, eBay, Amazon (including LoveFilm), Asos, Netflix and Shop Direct (Isme Very, Littlewoods etc)

July and year to date stats:

  • Months internet sales 9.5% (9.8% revised) of all sales
  • Year to date internet sales 9.9% (10.1% revised1) of all retail sales
  • Monthly year on year increase +10.7%.(+19.4% revised1)
  • Moving Annual total increases (1) on June 2013 annualised +8.7% (2) on July 2012 +13.8%
  • The UK’s *largest online retailer is included in the group Non-store retailing and this sector shows growth of 10.7% on 2012 and accounts for nearly 50% of all online retail sales. This is an area which SHOULD just grow & grow unless further analysis is undertaken of this channel!

As always the “history” has been revised1 by the ONS which this month went back as far as December  2012 with some largely favourable changes to Internet sales. They were revised upwards in 4 of the last 7 months!.

 The ONS words are:

Internet Sales – Key Points

  • Average weekly spending online (internet sales values non-seasonally adjusted) in July 2013 was £586.6 million. This was an increase of 10.7% compared with July 2012.
  • The amount spent online accounted for 9.5% of all retail spending excluding automotive fuel.
  • As expected, more was spent online in the non-store retailing sector than any other sector.
  • Spending online now accounts for 63.7% of total spending in this sector. In the food sector 3.2% of spending was online. This sector has the lowest proportion of online spending in relation to all spending.

 Internet sales in detail

Internet sales estimate how much was spent online through retailers across all store types in Great Britain. Figures are non-seasonally adjusted and the reference year is 2010=100. Table 2 shows the year-on-year growth rates for total internet sales by sector and the proportion of sales that each sector makes to total internet sales.

Table 2: Summary of Internet Statistics for July 2013

We have added our annotations to the ONS table) – The bold categories/ figures in the table are the primary constituents of the total (ie (a) + (b) + (c) = All retailing). Dept. stores, Textile etc, Household etc and Other stores are simply an analysis of (b) All non-food.

We have also added the weekly Internet sales figures by sector and the proportion they represent of all online sales. (We have corrected a misstatement of these %’s in last months table).

Sector summary

The non-store retailing sector comprises of stalls and markets, mail order and those retailers that sell mainly online.

* Whilst the ONS will not confirm the names of specific retailers within categories they did say that retailers selling wholly online with no physical outlets would be included in the Non store retailing category along with eg online  mail order retailers.

As previously mentioned the figures are no longer experimental.

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The moving annual total, which we report, moved up again (it has increased EVERY MONTH since October 2007 being the first full year of reporting by the ONS) to an all time high of £31.3 billion an increase in the month (adjusted re restatements and revisions) of 0.73% annualised 8.7%. The average this year is 13.4%. The long term compound average growth rate (from 2007) is a  23.5%.

Click to enlarge

The published weekly figures at £587 million was below our estimate (£600) but we met our £31.3 billion moving annual total target due to historic revisions. August we guess may see a return to more average weather and an increase in online spend so we will stick with our £600 million target together with a moving annual total of £31.8 billion ish.

We have again included our experimental graph (e & o e!) showing the relative internet and non-internet, moving annual total, sales from late 2007 by month. As before it highlights that high street sales have been and continue to go nowhere! As, we have mentioned before, the Boston Consulting Group forecast  in their report (The $4.2 Trillion opportunity)  that this trend is likely to continue with the high streets market share contracting at around 2.75% a year from 2010 through 2016.

Further details and explanations are either in the ONS release on the statistics or on their website. As previously mentioned a retail convention of a 4, 4, 5 week quarter is used by the ONS (December is a 5 week month). To cater for the inconvenience of years not having 364 days every 6 years or so an extra week is included in the statistics. The ONS adds this in January.

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