Focus on October Internet Retail Sales as the spendfest begins

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Just over a week ago  The Office for National Statistics (ONS) published the monthly retail sales figures for October (pdf) with a special focus on internet sales Full details  are available on the ONS site.

Overall figures showed a drop of 0.7% against an expectation of a flat month but the ONS reckon on a three monthly basis tat they were flat after a seven month period of sustained growth. The weather yet again remains subdued! (in terms of its influence on this months statistics)!

Our Internet sales headlines:

  • October Internet sales up at 10.5%, their highest level this year and are 10.0% year to date on all retail sales..
  • Online food sales at 3.5% of all food sales were up to nearly an all time high and ahead of their year to date levels.
  • For every £1 spent in the online retail sector 47 pence was spent on non-store retailing 38 pence in non food stores and 15 pence in food stores! This compares with ALL Retail excluding online of  3p for non-store 47p in non food stores and 50p on food!
  • All internet sales excluding food were 16.5% (15.8% 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 Olympics last year have now virtually normalised to the average of over 20% 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)

October and year to date stats for internet sales:

  • Months sales 10.5% (10.0% revised) of all retail sales
  • Year to date sales 10.0% (9.9% revised1) of all retail sales
  • Monthly year on year increase of +15.9%.(+16.1% revised1)
  • Moving Annual total increases (1) on September 2013 annualised +13.4% (2) on October 2012 +14.8%
  • The UK’s *largest online retailer is included in the group Non-store retailing and this sector shows growth of 18.5% 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 November 2012  with overall small reductions to both Internet sales and all Sales

The ONS expanded words this month are:

Focus on Internet Sales

Internet sales estimate how much was spent online through retailers across all stores types excluding automotive fuel in Great Britain. All data are non-seasonally adjusted.

Internet sales are an increasing part of retail

Internet sales have been rising much more rapidly than retail sales as a whole in recent years, although there has been a consistent pattern of peaks towards the end of the year as shown in figure 4.

Generally, the proportion of retail sales from the Internet peaks in November, although in 2012 the peak was in December instead. The proportion for October 2013 is only exceeded by November and December 2012. Retail sales increase dramatically in December and, to a lesser extent November, due to the Christmas shopping season. It should also be noted that in early 2013 the proportion of sales made online did not fall to the same extent it had in previous years, this was largely due to the harsh winter weather experienced in early 2013 and consumers using the Internet as an alternative to in-store shopping.

Figure 4: online sales as a proportion of retail sales

 The proportion of retail sales made over the Internet has increased year-on-year in every month since 2007, although the rate of increase slowed during 2009 and has been erratic since. In October 2012, this proportion was 9.4%, meaning that the October 2013 figure of 10.5% represents a yearon-year increase of 1.1 percentage points. As shown in figure 5 this is higher than for most of thelast four years, but lower than in 2007 and 2008. It was unchanged on the previous month.

Figure 5: year-on-year change in online sales as a proportion of retail sales

Internet sales by sector

Department stores recorded the largest increase in the proportion of Internet sales in October, increasing by 0.7 percentage points between September and October to 9.9%. This also represented an increase of 2.3 percentage points year-on-year. The value of Internet sales in this sector increased by 18.8% month-on-month and by 39.3% year-on-year.

Conversely, there was a slight decrease in the proportion of Internet sales in the non-store retailing sector, which includes mail order companies and stalls and markets, from 66.2% in September to 65.4% in October. However, this was still an increase of 2.0 percentage points year-on-year, additionally, the value of Internet sales increased by 18.5% in this sector.

Internet sales in detail

Internet sales are estimates of how much was spent online through retailers across all store types, excluding automotive fuel, 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 September 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) 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.

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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 £32.3 billion an increase in the month (adjusted re restatements and revisions) of 1.12% annualised 13.4%. The average this year is 13.2%. The long term compound average growth rate (from 2007) is 23.0%.

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The published weekly figures at £652 million was a little behind our aggressive estimate (£680) and we also were £0.5bn short of our £32.7 billion moving annual total target. November is the height of the spendfest season so we so we will go big again and look for a jump to a £835+ million target alongside a moving annual total of over £33 billion.

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 (March June September and December are 5 week months). 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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