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Our Thought Provoking Insights

At a glance: Trends in online and in-store retail sales post-pandemic

The Pandemic and subsequent lockdowns have had a profound impact on shopping patterns, particularly by channel. In non-foods many non-essential stores were forced to shut, pushing consumers online, many for the first time. Meanwhile, restaurants shut, and food stores were allowed to stay open. Nevertheless, caution (and often Government guidelines) forced the public to eat at home and very often, order groceries online. Both channels saw massive surges in online demand and switched investment fast to cope. It was always clear that once lockdowns ended and consumers gradually regained their freedom and confidence, some of the ground gained in market share would reverse.

The resurgent stores sector sales trend isn’t moving in a straight line, but the direction of travel has been clear for 18 months or more and has continued. Nevertheless, following 14 months of year-on-year monthly falls by value, July’s online numbers show year-on-year growth for the fourth month in succession. The pace at which share is being lost has slowed markedly, and we could well be seeing the beginnings of a mini-recovery online. Share for June was 38.1% compared with its peak of 45.5% for calendar 2022.

Online food sales have also seen a shift back to stores and away from online. Unlike non-foods, there is little evidence yet of a swing back to online. June’s 8.3% is some way behind the 10.7% peak seen in calendar 2022.

The retail sales numbers of recent months have been hugely influenced by inflation. However, the underlying pattern of demand is weak. As the cost of servicing household debt increases, disposable spend will be further squeezed. The second half of calendar 2023 will be tougher for retail, and the pressure will last into 2024. Discretionary markets will be particularly impacted as some purchasing can be postponed. Nevertheless, inflation is certainly showing signs of easing somewhat and this will mitigate these pressures to a degree.

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