GFS powers delivery from checkout to doorstep – anywhere in the world.
ONS proportion of retail spent online hits record 34%
According to the latest ONS figures, the proportion of retail spent online soared to the highest proportion on record in May 2020 at 33.4%, which compares with the 30.8% reported in April 2020. However this is against a back drop of during the three months to May 2020, the volume of retail sales decreased by a record 12.8%, with declines across all stores except food and non-store retailing.
From May 2010 to May 2020, the fastest rate of growth is seen in non-store retailing with a continued increase the proportion of retail spent online. This became even more apparent from March 2020 with a boom in online sales during the coronavirus pandemic. In May 2020, non-store retailing sales volumes increased by 24.3% in the most recent three months and by 21.0% when compared with April 2020; the highest growth rates for non-store retailing on record for both measures.
Household goods stores saw the biggest increase in volume sales in May 2020 at 42.0% when compared with April. Music and video recordings were the only store type in this sector to show a fall in volume sales, while furniture, electrical household appliances, and hardware, paints and glass stores all increased in their volume of sales. According to retailers in this sector, consumers appeared to be carrying out home improvements while spending more time than usual in their homes. For hardware, paints and glass stores, the increase of 67.4% in May 2020 brought volume sales back to the usual level.
Clothing and other non-food stores both also increased their proportion of online retailing in May to record levels. Feedback from a number of these stores reported to have opened their online sites in May after a pause in trading in April.
This brings us on to the question of what happens next? As discussed in last week’s webinar (Recommmend – you can watch it on demand here), our guest presenter Bobbie Ttooulis, Group Marketing Director at GFS, pointed out that the high street closing and massive increase in online spend isn’t a forced change in consumer behaviour, rather the enforced rise in the proportion of retail spent online is simply an acceleration of behaviour that was already taking place. As can be seen from the chart above, the proportion of non-store retailing has steadily grown over the past five years even discounting the massive rise in April and May this year.
There will be ongoing challenges for bricks and mortar retailers, not least when winter comes and queuing outside a store is less attractive. Deeper challenges will be consumers unable to touch and try on clothing or if fitting rooms are open having to isolate stock for 72 hours before it’s put back onto shelves for sale.
An interesting trend to watch for which will impact your logistics is buy in-store return online. We are accustomed to consumer rights to return online purchases but retailers who want to reassure consumers in-store may soon start to offer online returns so buyers don’t have to socially distance queue up to return products they couldn’t try on before purchasing.
“Closed fitting rooms and encouraged not to pick up items means that during this social distancing period, shoppers will have a much less tactile experience than they’re used to. It’s going to cause a few ripples and is likely to be a poorer experience than they’d get online. Shoppers will also end up buying more items when out (different styles and sizes of clothing for example) and send back those they don’t want. With many stores now unable to process returns instore due to the pandemic and prolonged returns windows, retailers need to look for contact free returns methods and help customers to get refunded quicker.
Located outside, requiring no human interaction and available 24/7, parcel lockers can help retailers to get on top of contact free returns. They’re also helping key workers and more vulnerable customers to safely collect/return goods at times that suit them, making social distance easier than entering a shop.”
– Jason Tavaria, CEO, InPost UK
The ONS reported increase in the proportion of retail spent online is a natural opportunity for pure play online merchants and for retailers with a strong online omnichannel offering. We would also expect significant increases in D2C (direct to consumer) strategies by brands and an acceleration of cutting out the middle man and marketing directly to consumers.
With online sales accelerating at record levels, GFS have prepared a 9-step action plan for in order to meet consumer expectations in the new normal which you can download for free here.