Shoppers return to physical stores as online sales drop in August

Online sales fell last month as shoppers flocked to physical stores according to new data.

The British Retail Consortium (BRC) and KPMG’s monthly sales monitor found that online sales of non-food products fell 3.6 percent in August, with 38.3% of sales now being online compared to 42% in the same month last year.

Retail sales continued to grow overall in August – an increase of three percent compared to the previous month – but the pace of growth slowed significantly.

In July, the increase was 6.4%, but experts believe the build-up of pent-up demand during the various Covid-19 bans and restrictions is coming to an end.

The three percent increase in sales last month was due to formal wear, the BRC said as workers returned to offices and the wedding season was in full swing.

Helen Dickinson, CEO of BRC, said, “As the backlog has subsided after the lockdown, the retail sales growth we’ve seen over the past few months has slowed for August.

“Yet we still saw growth above pre-pandemic levels as people returned to stores in greater numbers.

“With the wedding season in full swing and employees gradually returning to the office, formal attire was a strong performer.

“In addition, the holiday weekend and the start of school contributed to an increase in non-food sales.

“Although online sales growth has slowed, it is still high compared to pre-pandemic growth rates.”

Don Williams, Retail Partner at KPMG, said, “As the retail recovery slows, the sector is expected to grow more slowly as retailers face increasing challenges on several fronts.

“Inflation is expected to accelerate and put pressure on household spending as retailers battle for their wallets as consumers spend money on leisure, entertainment and travel.”

The evidence that consumers are spending more on other activities was evident in the latest Barclaycard data.

The card company said spending in August increased 15.4% compared to the same period in 2019 before the pandemic.

All leisure sectors, apart from international travel, grew, including gastronomy, which grew for the first time in more than 17 months.

Consumer confidence has hit its highest level since February 2020, despite worries about inflation creeping in, Barclaycard said.

Spending on theater, festival, and theme park tickets was particularly high – it hit a new high at 24.2% of total spending, with similar increases in taxi and fuel spending.

The BRC added that grocery sales continued to rise, 2.9% in August year over year.

That was below the 12-month average growth of 14.4 percent, however, as shopping habits returned to normal.

Susan Barratt, Executive Director of the Institute of Grocery Distribution (IGD) said, “August grocery sales were largely unchanged from 2020 performance, with some spending shifting from retail back to the out-of-home sector.

“Although sales were limited by the cloudy weather, they were helped by stays and the late summer bank holiday, which resulted in slight growth in sales.”

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