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

Overall figures showed an increase in sales of 1.7% on last month which was 3 times greater  than expectations.

We are as last month adopting for our internet sales figures the new seasonally adjusted statistics issued by the ONS. As this is only the second first month of usage there will likely be certain updates in future months! January 2014 was the one year in six when an extra week occurs statistically and we have annotated our headline graph to show an approximately comparable level of sales.

Our Internet sales headlines:

• Internet sales remain at over 10% of all retail sales (excluding automotive fuel) for the 12^th consecutive month.
• Compared to January internet sales rose by 2.5%  contributing 17.2% (£16.8 million) to the overall retail sales increase in the amount spent of  £97.7 on a weekly basis.
• Online food sales continue to exceed £100 million a week for the fifth consecutive month and increased by 3.1% in the month
• 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!
• We do think the ONS needs to do more analysis of internet sales as already nearly half 47% this month are effectively categorised as sales by online retailers virtually irrespective of the underlying goods or services! 

February and year to date stats for internet sales:

• Months sales 10.7% (10.6% last month 9.9 % a year ago) of all retail sales
• Monthly year on year increase of 12.4%.(10.9% last month 14.3 % a year ago)
• Moving Annual total increases (1) on January 2014 annualised +9.1% (2) on January 2013 +17.2%
• The UK’s *largest online retailer is included in the group Non-store retailing and this sector shows growth of 12% on 2013 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!

The ONS words this month (which contain a mix of seasonally (SA*) and non-seasonally adjusted (NSA) figures are:

Key Points

The amount spent online increased by 12.4% in February 2014 compared with February 2013 and by 2.5% compared with January 2014.

Internet Sales in Detail

Seasonally adjusted Internet sales data are provided within this release. These seasonally adjusted estimates are published in the RSI tables (1.65 Mb Excel sheet) and include:

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

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

• Average weekly spending online in February 2014 was £678.8 million. This was an increase of 12.4% compared with February 2013.
• The amount spent online accounted for 10.7% of all retail spending excluding automotive fuel.
• The online spend in department stores was estimated at 22.0% of all spending in these stores.

Table 4 shows the year-on-year growth rates for total Internet sales by sector and the proportion of sales made online in each retail sector.

Table 4: Summary of Internet Statistics for February 2014

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 used seasonally adjusted figures throughout in our 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.

The moving annual total, which we report, moved up again (it has increased EVERY MONTH since January 2009  to an all time high of £34.6.billion an increase in the month  of 0.9% annualised 9.1%. The average this year is 18.9%. The long term compound average growth rate is 23.0%.

The published weekly figures was £678.8 million which exceeded our estimate. The moving annual total and £34.6 billion was in line with our expectations!

The average monthly increase has been around 1.6% but we’re goin for another above average March increase so are looking for £695 million and a moving annual total of close to £35 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) http://i.co.uk/?p=4721 that this trend is likely to continue with the high streets market share contracting at around 2.75% a year from 2010 through 2016. Due to the exceptional 5 week month in Jan 2014 there is a 6 yearly jump to allow for the 53^rd week!

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 which happened this year the last one being in 2008.

RetailMeNot and the Centre for Retail Research recently got together some comparative statistics for online retail sales in GB, the USA and Europe (Great Britain, Germany, France Italy, Spain, Sweden, Poland and the Netherlands).

At an overview level they foresee in 2014 online retail sales of:

• USA €306.0 bn
• Europe €155.3

So as near as makes little difference the US is double Europe. Britain at £45 bn or €62.8bn represents the largest European market at just over 40% of the total. Germany is forecast to be the next largest at €49.4 or just over 30%.

In their accompanying infographic they show, inter alia EVERY bricks and mortar or high street market in all 9 countries contracting in 2014.

Their view is that these 9 countries are at three  different “… stages in online market development and business strategy:

• Maturity – market share of 9.5% or above, 55%+ of the population are internet shoppers, rapidly developing mobile use (15%+ of all online in 2014), multiple online providers throughout each sector and 12+ purchases pa by each shopper.
• Mid range – market shares of 6.5% to 9.5%, a wide range of suppliers, more than ten purchases pa per shopper, 45% are online shoppers and a smaller mobile use.
• Immature – online market share below 6.5%, patchy takeup (regionally or demographically) of online retailing, fewer than ten purchases pa, and some trade sectors are comparatively less developed.”

We wouldn’t disagree but we think one of the key drivers of market change in online retail sales is likely to be in the food sector where eg in Britain currently only something like 3.5% of this huge market is sold online. Excluding automotive fuel in January in Britain over 47% of the TOTAL retail spend was on food!

This research foresees a huge expansion in online mobile (smartphones & tablets) device retail sales  this year with Europe increasing from 8% to 13.1% of the total and in the US a comparable increase from  13.8% to 19.9%. It could be said here that Europe is a year behind the US!

Britain again leads Europe with, they forecast, 17.6% of online retail sales being made using mobile devices in 2014.

A most impressive piece of work

We repeat below the details they provide on their methodology.

Methods

The statistics are problematic as state statistical research organisations often tend to underestimate the size of the sector, because conventionally they are best at collecting information from companies that own retail shops. There can be problems in determining online sales from abroad, because UK statistical authorities may not be fully aware of their scale, foreign firms may not wish to comply fully with UK statistical needs, and sampling may be problematic as a result of rapid sector change. There are important issues about whether to include mail order when it is mainly online and how to account for partial online ordering such as click and collect. Other issues include the definition of ‘retail’ where US authorities seem to combine food services (cafes and restaurants) within retail, which is not the case in Europe. However in Europe and the US fuel for cars is normally included as ‘retail’ but as this is not the retailing of goods and would be difficult to sell over the web we have attempted to adjust our estimates to take account of this.