Internet Retail Sales steady in August could be £50 billion by 2018

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

The overall figures of a 0.9% decrease came as an almost complete surprise as an increase of around 0.4% was expected and hence some gloom returned after recent goodish news. http://www.bloomberg.com/news/2013-09-19/u-k-retail-sales-unexpectedly-fall-as-food-plunges.html The weather hardly go a mention but last years Olympics still linger on (in statistical terms of course)!

Our Internet sales headlines:

  • Internet sales remain at just below the 10% level (9.9%) of all sales for the year to date and were 9.7% in the month.
  • 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 48 pence was spent on non-store retailing 36 pence in non food stores and 16 pence in food stores!
  • All internet sales excluding food were 15.6% (15.4% revised) and have now been within a range of 15.4% -17.1% since November last year.
  • The decline in the rates of growth of the major online only retailers noted in previous months starting with the Olymoics last year shot up this month to 35.9% (15.7% revised). After a 4 month lull it looks as if we are returning to the average of over 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)

August and year to date stats:

  • Months internet sales 9.7% (9.6% revised) of all sales
  • Year to date internet sales 9.9% (10.0% revised1) of all retail sales
  • Monthly year on year increase +22.5%.(+12.3% revised1)
  • Moving Annual total increases (1) on July 2013 annualised +16.3% (2) on August 2012 +14.8%
  • The UK’s *largest online retailer is included in the group Non-store retailing and this sector shows growth of 35.9% 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 changes +/- to Internet sales. The weekly figure for July was revised upwards to £595.5 being 9.6% of overall sales.

The ONS words are:

Internet Sales – Key points

  • Average weekly spending online (Internet sales values non-seasonally adjusted) in August 2013 was £579.6 million. This was an increase of 22.5% compared with August 2012, however it should be noted that Internet sales were unusually low in August 2012 as feedback suggests consumers watched the Olympics and Paralympics instead of shopping online.
  • The amount spent online accounted for 9.7% 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 66.6% 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 August 2013 (amended)

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) link

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.

Click to enlarge

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 £31.7 billion an increase in the month (adjusted re restatements and revisions) of 1.36% annualised 16.3%. The average this year is 13.8%. The long term compound average growth rate (from 2007) is a 23.4%.

Click to enlarge

The published weekly figures at £580 million was below our estimate (£600) and we just missed our £31.8 billion moving annual total target. September is the sort of lull before the spendfest season  so we so we will stick with our £600 million target alongside a moving annual total of over £32 billion. Elsewhere Verdict Retail are forecasting that it will finish the year at £34 billion and by 2018 it will reach £50 billion.  We shall see!

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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