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Online makes up a quarter of retail sales in January 2023

Online shopping makes up a quarter of all retail volumes in the first month of 2023, but retail is still rocky as the cost of living rises

Online retail sales accounted for a quarter of all retail sales in January 2023, according to numbers from the Office of National Statistics (ONS).

This is a small drop month on month, with online retail sales making up 25.4% of all retail sales in December of 2022.

Overall quantity of total retail sales for Great Britain in January 2023 saw a dip year on year (YoY) by 5.1%, although month on month sales across all retail – both on and offline – grew 0.5%.

Helen Dickinson, chief executive of the British Retail Consortium, said: “Widespread January sales helped sales growth remain positive as the industry entered the New Year. Despite this, the rise in consumer spending could not keep up with the double-digit inflation rates, with another fall in retail volumes.

“Larger purchases were hit harder as consumers tightened their purse strings or traded down to value brands. Meanwhile, clothing and footwear saw stronger growth last month.” 

“With consumer confidence falling slightly, and high costs throughout the supply chain preventing prices from falling, it is a bumpy road for households. However, retailers are taking steps to cut costs and limit price rises where they can to help their hard-pressed customers.” 

ONS figures show the value of online sales also dropped month on month in the first month of 2023, with online-only retail and clothing being the only verticals not to see a month-on-month drop in value of spend – a different story to overall retail sales, which saw a 4.1% YoY growth in the amount spent in January 2023, and a 0.6% increase in the value of sales month on month.

YoY clothing also saw growth in online shopping in this category by 3.1%, and department stores saw an increase of 1.1% in the number of the vertical's total purchases made online in January 2023 when compared with the same month in 2022, with all other categories seeing a decline in the YoY number of their online sales.

When compared to the same month in 2022, the percentage of all retail purchases made online in January 2023 dropped by 9.2%, and has dropped by 2.1% when compared with December 2022.

The increasing cost of living is a factor for retailers as consumers do what they can to save, affecting consumer demands and behaviour – research by Adobe Analytics suggested around 12% of online spending in the UK in January this year was done through buy now, pay later (BNPL) fintech services.

But despite small drops, online retail is still above where it stood pre-pandemic, where it only made up 19.8% of all retail sales in February 2020.

The Covid-19 pandemic has also been a factor in shifting consumer behaviour – this increase in online activity was something many predicted before the pandemic, but was exacerbated by consumers being forced online when the UK went into Covid-19 lockdowns.

This trend has been reflected in online sales figures over the past three years, with Capgemini/IMRG Online Retail Index figures in January 2022 showing a 24.4% YoY drop in online sales following a 61.8% increase in January 2021 when much of the UK was still in lockdown.

Popularity of retail categories varied in January 2023 – for every £1 spent online, 46.3p was spend on non-store retailing.

Food retail accounted for 15.7p of each £1 spent online, and clothing was one of the most popular non-food categories, with 10.9p per £1 being spent online going to textiles, clothing and footwear goods.

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