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E-commerce growth boosts September sales

E-commerce growth boosts September sales
Friday October 18 2013

Financial strategist Joshua Raymond examines the latest retail sales figures released this week and discusses the ever-growing impact of online shopping

It’s hard to imagine a world without the internet, especially when it comes to buying what we need. 

In just over a decade, e-commerce has seen its popularity build up gradually to a point where Joshua Raymond, chief marketing strategist of Cityindex.co.uk, points out that it now accounts for over £1 in every £10 spent by consumers in the UK. “82% of Brits now admit to spending at least some money online, more than in any other EU member state,” he stated.

As proof of how important online retail has become to the overall health of the UK economy, month-on-month e-retail sales growth in September stood at a massive 13%, the highest monthly rise in 13 years. This growth played a big part in driving up overall retail sales, which increased by 0.6% in the same period, up from a contraction of 0.8% in August.

Clicking into gear

Raymond said: “Among the companies helping to push online retail in the right direction are the likes of Amazon, fashion retailer Asos, who exclusively sell their products online and some of the leading supermarket chains like Asda, Tesco, Waitrose and Sainsbury’s. Tech sales from department stores and specialist retailers shot up last month too.”

In total, year on year growth in online retail rose by 19.1% compared to September 2012. In detail, the same figure stood for non-food retail, with department stores experiencing a rise of 29.8%. According to the Office for National Statistics’ monthly report, other stores saw sales rise by 25.7% in the same period, giving plenty of encouragement for tech retailers.

Shopping on the go

“The technology behind online retail has evolved constantly in the past 15 years or so,” Raymond continued. “Initially, slow internet connections, questions over secure payment and a comparative lack of demand for it had undermined progress, but faster download speeds, improved security and wider availability have all played a part in giving e-commerce an increasingly prominent role in the retail sector.

“What has really helped to boost online retail is smartphones. The likes of Apple’s iPhone and Samsung’s Galaxy range have helped to see spending via mobile devices rocket upwards, while smartphones themselves are big sellers. Year on year, sales of smartphones have increased by 150%, while shopping with them is something people are finding a little more comfortable.”

Every little helps

The strategist added that, although September’s figures are pretty encouraging all round, they follow on from a mixed August. “The previous month saw overall retail sales drop by 0.8% in terms of value, while volume sales fell slightly faster at 0.9%,” he explained. “If anything, September’s figures just manage to help make up for August’s losses, although in terms of the upcoming Q3 GDP [third quarter gross domestic product] announcement, they could be important.”

Raymond also said online retail’s growth has come at the expense of the High Street, which is experiencing tough times despite the downturn officially ending earlier this year. “Competition from online retailers, plus the convenience that buying products via a computer, smartphone or tablet can bring may see some traditional ‘bricks and mortar’ retailers struggle for some time to come,” he predicted.

Non-store sector top

“While conventional retail sales grew significantly (with the sole exception of household goods stores), non-store sales rose by 21.1% year on year. Last month, non-store retailing accounted for 66.5% of total online sales, but what do they include,” he commented. “On the whole, it’s mainly the sale of services such as web design and remote IT support – things that can’t be bought in physical form.”

“The sale of services may continue to grow online, as it makes sense for many business owners and sole traders looking for help with putting together their website, marketing advice and the like. Despite that, online retail still accounts for just a relatively small fraction of consumer spending, although that is changing,” Raymond concluded.

Tagged as: Sales | e-commerce | m-commerce | ONS | IMRG | Capgemini | E-Retail Sales Index | Cityindex.co.uk