Internet sales in Q4 hit new record of over £10 billion

On Friday The Office for National Statistics (ONS) published the monthly retail sales figures for December(pdf) Full details  are available on the ONS site.

Overall figures showed an increase of 2.6 % in the month which was way ahead of virtually all expectations.   The ONS continue with their preferred three monthly view which showed an increase of 0.4% after a couple of flat months. The weather whilst unmentioned was subject of a recent separate release – “A short story questioning the impact of weather on retail saleswas published on 15 January.”

[Whilst the ONS have introduced seasonal adjustment for Internet sales this month for the first time we are only reporting unadjusted figures this month and accordingly have amended their figures where appropriate to the Non Seasonally Adjusted (NSA) ones to be consistent with the rest of ourreporting throughout 2013.]

Our Internet sales headlines:

  • Overall internet sales in the last quarter exceeded £10 billion for the first time ever.
  • At 11.8% of all sales following November’s (revised) 12.0% these are the two highest ever recorded % monthly figures.
  • On an annual perspective Internet sales at £33.3 billion represented 10.4% of all sales up from 9.3% in 2012 and 8.3% in 2011.
  • Looking forward to this year if recent trends continue annual Internet sales could reach around £39 billion and be over 11% of ALL retail sales

December, Quarterly and Annual increases:

  • the year on year increases were  December 15.2% Quarterly 14.8% and Annual  15.1%.
  • Moving Annual total increases (1) on November 2012 annualised + 23.5% (2) on December 2011 +15.3%
  • The UK’s *largest online retailer is included in the group (Non-store retailing) showing growth of 10.1% on 2011 and contributing  4.1% to the overall growth of 15.5% This is an area which SHOULD just grow & grow) unless further analysis is undertaken of this channel!

As always the “history” has been revised by the ONS which this month went back as far as December 2012 with in general smallish increases in Internet retail sales.

The ONS words (amended to reflect non seasonally adjusted figures are:

Internet Sales

Key Points (1)

  • Non-seasonally adjusted data show that the proportion of sales made online decreased by 0.2 percentage points to 11.8% of all retail sales (excluding automotive fuel).

Internet sales, which are seasonally adjusted for the first time in this release, increased by 11.8% in December 2013 compared with December 2012 and by 1.8% compared with November 2013. [As mentioned above we are not reporting on the new seasonally adjusted figures this month. We will incorporate them, likely in full, with respect to the January 2014 figures]

Internet sales in detail

 Seasonally adjusted Internet sales data are provided within this release. These seasonally adjusted estimates are published in the RSI tables and include:

  •  A seasonally adjusted value index; and
  •  Year-on-year and month-on-month growth rates.

ONS are currently investigating whether it is possible to seasonally adjust the proportion of sales made online. More information on the seasonal adjustment of these estimates can be found insection 4 of the background notes or in the quick guide to Internet sales.

Internet sales are estimates of how much was spent online through retailers across all store types in Great Britain. The reference year is 2010=100.

Key Points (2) adjusted by us to an NSA basis

  • Average weekly spending online in December 2013 was £957.7 million. This was an increase of 13.2% compared with December 2012.
  • The amount spent online accounted for 11.8% of all retail spending excluding automotive fuel.
  • The online spend in department stores was estimated at 38.2% reflecting feedback from retailers that suggested that investment in their Internet sites has boosted sales but at the same time detracted from sales in store.

Table 5  shows the year-on-year growth rates for total Internet sales by sector and the proportion of sales made on line for each sector

Table 5, Summary of Internet Statistics for December 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.

* 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 £33.3bn an increase in the month (adjusted re restatements and revisions) of 1.7% annualised 20.4%. The long term compound average growth rate (from 2007) is just under 23%.

Click to enlarge

The published weekly figures at £957.7 million was a new record and well above our £951+ mn  prediction and we were spot on with our £33.3 billion for the year. January will likely revert to form and a weekly NSA figure of perhaps £650 mn with an annual figure around £33.6 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 (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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