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Online makes up 25% of retail sales three months in row

The percentage of all retail sales made online remains steady at around a quarter this year, though cost of living is affecting customer behaviour

Online retail sales have accounted for a quarter of total retail sales three months in a row so far in 2023, according to numbers from the Office of National Statistics (ONS).

While online retail sales in March were 0.4% higher than the previous month, January, February and March of 2023 have seen ecommerce consistently make up around 25% of all shopping.

But the amount of overall goods purchased both on and offline in March 2023 was down again year on year (YoY), after also showing negative growth in January and February.

Nicholas Hyett, investment analyst at Wealth Club, said: “The retailers surveyed by the ONS put the worse-than-expected slump in retail sales down to a combination of poor weather and the salad shortages of early March. That may be a contributing factor, but in the longer term we think inflation and the cost-of-living squeeze is the driving force. 

“Over the last two years, sales volumes have fallen 9.5%, but the pounds and pence value of those sales are up 6.9%,” he said. “Shoppers are consistently spending more but getting less. This is the tearaway inflation of the last year at work, squeezing wallets even as consumption falls in real terms.”

ONS stats show that in comparison with last year, consumers are spending more on less – in March this year, the total volume of retail goods purchased was down by 3.1% compared with the same month last year, while the amount spent was up by 4.5% YoY.

These figures have been a trend in 2023, with February seeing total retail volumes dropping by 3.5% while value increased by 5.5% YoY, and January seeing a YoY increase of 4.1% in spend against a 5.1% drop in quantity bought.

Non-food retail transactions

The percentage of all non-food retail transactions completed through online shopping has been on the rise this year, with online sales making up 21.1% of non-food retail sales in March 2023, up from 20.6% in February and 20.3% in January.

When compared with the same month in 2022, the percentage of total retail purchases made online in March 2023 increased 3.6%, and saw a small 0.8% growth when compared with the month before.

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Despite small drops in previous months, 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 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.

Experts are also claiming cost-of-living increases are factoring into consumer behaviour, hence the ongoing trend of increased value of spend with decreased volume of purchases.

The popularity of using online channels for food shopping has seen a slow downward trend this year, after a surge during the pandemic.

As well as the 0.5% YoY drop in the percentage of non-food purchases made online in March 2023, ecommerce only accounted for 8.2% of all food retail, a drop of 1.6% when compared with the same time last year – though slightly better than February 2023, with a growth of 0.3% month on month.

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