Internet Food Sales still increasing midst Supermarket Price wars

The Office for National Statistics (ONS) published  the monthly retail sales figures for July towards the end of last week (pdf) Full details  are available on the ONS site.

Overall figures showed an increase in sales volumes of  0.5% (excluding fuel) on last month which according to Bloomberg was marginally ahead of expectations. Food pricing and competition figured as the value of sales fell by 1.3% in the month compared with 2013 which was the first time such a decrease has ever been reported. Incidentally internet food sales in July rose 10.9% compared with 2013.

The ONS on their preferred quarterly view noted continuing significant growth ” The three-month on previous three-month movement in the quantity bought showed continued growth for the seventeenth consecutive period increasing by 0.3%. This has been the longest period of sustained growth since November 2007.”

All the figures we quote are now the new seasonally adjusted statistics issued by the ONS. 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 food sales equal their all time high of £109 million again and are over £100 million a week for the tenth  consecutive month
  • July internet sales down 1.9% on June
  • For every £1 spent in the online retail sector 48 pence was spent on non-store retailing 37 pence in non food stores and 15 pence in food stores!
  • We do think the ONS needs to do more analysis of internet sales as already half are effectively categorised as sales by online retailers virtually irrespective of the underlying goods or services! These average YoY growth figures of over 20%

July and year to date stats for internet sales:

  • Months sales 11.2% (11.4% last month 10.3 % a year ago) of all retail sales
  • Monthly year on year increase of 11.2% (14.5% last month 10.7 % a year ago)
  • Year to date increase on 2013 is 13% of all retail sales
  • Moving Annual total increases (1) on June 2014 annualised +8.3% (2) on July 2013 +16.7%
  • The UK’s *largest online retailer is included in the group Non-store retailing and this sector shows growth of 11% 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 are:

“Key Points

The amount spent online increased by 11.2% in July 2014 compared with July 2013 but decreased by 1.9% compared with June 2014.

Internet Sales in Detail

Seasonally adjusted Internet sales data are provided within this release. These seasonally adjusted estimates are published in the RSI internet tables (196 Kb 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 July 2014 was £716.0 million. This was an increase of 11.2% compared with July 2013.
  • The amount spent online accounted for 11.2% of all retail spending excluding automotive fuel, compared with 10.3% in July 2013.
  • The online spend in department stores increased by 16.0% year-on-year, but decreased by 5.3% in the other stores sector.

Table 5 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 5: Summary of Internet Statistics for July 2014 (seasonally adjusted)Figure 5: Value of internet sales as a proportion of all retailing (excluding automotive fuel, seasonally adjusted) 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. Historically it looks as if we may have transposed the weekly sales figures for Household goods and Textiles this year. If you have a particular interest in this split if you get in touch we will provide you with restated tables.

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 January 2009  to an all time high of £36.5.billion an increase in the month  of  0.8% annualised 8.3%. The average this year is 14.4%. The long term compound average growth rate is around 23%.

Click to enlarge

The published weekly figure was £716 million which was well below our estimate but due to historic revisions the moving annual total came out just £0.1 billion below our estimate.

 

The average monthly increase this year is  now down to 0.7% but we’re looking for an uptick next month so we’re  going for £735-£740 million in August and a moving annual total of close to £36.8 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. Due to the exceptional 5 week month in Jan 2014 there is a 6 yearly jump to allow for the 53rd 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 previous one being in 2008.

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