Online sales fall in August with a high street bounce back

Online sales fell last month as shoppers returned in droves to physical stores, according to new data.

The British Retail Consortium (BRC) and KPMG monthly sales monitor found that non-food online sales dropped 4.6% in August, with 38.3% of sales now online compared to 42% during the same month a year earlier.

Total retail sales managed to continue rising in August – up 3% compared to a month earlier – but the speed of growth slowed significantly.

In July the rise was 6.4% but experts suggest the pent-up demand building during the various Covid-19 lockdowns and restrictions is coming to an end.

The 3% rise in sales last month was driven by formalwear, the BRC said, with workers returning to offices and the wedding season in full swing.

Helen Dickinson, BRC chief executive, said: “As post-lockdown pent-up demand has softened, the growth in retail sales we have seen over the past few months slowed for August.

“Nonetheless, we still saw growth above pre-pandemic levels, as people returned to stores in greater numbers.

“With wedding season in full swing and workers gradually returning to the office, formalwear was a strong performer.

“Additionally, the bank holiday weekend and back-to-school buzz contributed to a rise in non-food sales.

“While the online sales growth has begun to slow, it is still high when compared with pre-pandemic growth rates.”

Don Williams, retail partner at KPMG, said: “With the retail recovery showing signs of slowing, the sector is expected to grow at a more muted rate as retailers face increasing challenges on a number of fronts.

“Inflation is expected to accelerate putting pressure on household spending, whilst retailers battle for share of wallet as consumers spend money on leisure, entertainment and travel.”

The signs that consumers are spending more on other activities was played out in the latest Barclaycard data.

The card company said spending rose 15.4% in August compared with the same period in 2019, before the pandemic.

All leisure sectors, apart from international travel, grew included restaurants, which rose for the first time in more than 17 months.

Consumer confidence has reached its highest point since February 2020 although concerns over inflation are creeping in, Barclaycard said.

Spending on theatre, festival and theme park tickets were particularly strong – hit 24.2% of total spending to reach a new high, with similar boosts in taxi and fuel spending.

The BRC added that food sales continue to increase, up 2.9% in August compared with a year ago.

But this was below the 12-month average growth of 14.4% as shopping habits return to normal.

Susan Barratt, chief executive of the Institute of Grocery Distribution (IGD), said: “Food and drink sales in August were broadly flat on 2020’s performance, with some spending switching from retail back into the out-of-home sector.

“Despite sales being limited by the dull weather, they were supported by staycations and the late summer Bank Holiday, which helped sales show a small amount of growth.”