The rise and rise of online retail

Online sales rose by 52.7% year-on-year in August (in value terms and non-seasonally adjusted), compared to an 11.6% rise in the same month of 2019.

In this year’s figures, online food posted the strongest performance, with sales up 91.2% in August, as consumers prepared and consumed more meals at home. 36% of the population was working from home according to the Office for National Statistics. Online sales of household goods were up 83.5%, while other non-food goods rose 77.6%.

However, there’s evidence that the exponential growth in ecommerce seen in previous months has now begun to slow. 

Nevertheless, the struggles of physical retailers continue. For this reason, the Government has extended its ban on evictions of retail tenants by landlords. This provides some comfort to the sector, which has warned the end of the ban could lead to a surge in store closures and job losses. The concession is part of a rebalancing of power in this space. Landlords have historically seen near-continuous growth in rents. Whilst retailers are keen to build market share by expanding their physical footprints, the growth of ecommerce has changed that dynamic. Turnover-based agreements have become increasingly common.

As retail looks to the future, the sector is reflecting on three trends that have emerged amid the pandemic:

• channel shift – a move to online retail, but also towards more localised shopping and to a preference for open-air retail venues, such as retail parks
• spending transfers – consumers are spending less on restaurants, travel and holidays, and commuting. Saving is increasing, as is spending on groceries
• lifestyle changes – with people working from home and spending more of their leisure time there too, they’re more likely to be cooking from scratch and engaging in home improvement activities.

Mapping the impact of the coronavirus crisis

New data from the Office of National Statistics (Wave 13, Business Impact of Coronavirus (Covid-19)), reveals that during the period from 24 August to 6 September, 84% of businesses were trading, 13% were temporarily closed or had paused trading, and 3% had permanently ceased trading. 

Among businesses continuing to trade, 47% reported reduced turnover compared with what they would normally expect for the time of year. 34% said turnover was unaffected, and 12% reported turnover was exceeding expectations.

Retail and wholesale insights from Santander

Santander’s ‘Views from industry’ webinar series features a range of insights and solutions to support businesses.  

• Lifestyle (USA / UAE): Global ecommerce: UK retail impact and global ecommerce opportunities (link) - April 2020
• Lifestyle (Global): Optimise and transform brands to stay competitive in the new age of digital (link) - May 2020
• Lifestyle & Homewares (Asia Pacific): Tomorrow’s retail trends: insights from Global/Asia Pacific markets (link) - May 2020