Opinion: “February’s ONS figures finally give retailers something to smile about”

Ehimetalor Akher Unuabona on Unsplash
  • By David Jinks, head of consumer research, ParcelHero

“Today’s Office for National Statistics (ONS) retail figures for February have finally given Britain’s hard-pressed retailers something to smile about. The amount of goods Brits bought in-store and online increased by 1.2 per cent compared to January while spending increased by 1.6 per cent, although the spiralling cost of fruit and veg was responsible for some of this increased spend.

“Britain’s online sellers didn’t lose out in this unexpected sales bonanza. The value of e-commerce sales rose by 2.6 per cent compared to January and online sales grabbed 25.4 per cent of the overall retail market, up from 25 per cent on the previous month.

“February saw a heartening rise in consumer spending, as shoppers sought to shake off the gloom of last year’s inflation boom and soaring household energy bills. Recession looks increasingly unlikely this year, and it seems Brits are feeling a little more confident. That has translated into these better than expected sales results.

David Jinks

“It’s particularly encouraging that the increased spend was across both stores and online. Successful omni-channel sales are key to enabling retailers to maximise their profits while keeping customers happy. It looks as if discount department stores were a particular winner in February. Department store sales boomed by 5.5 per cent over the month. Online department store spending also increased by 2.1 per cent.

“However, a deeper dive into the figures reveals the elephant in the room – or, rather, store. That’s the volume of sales compared to last year, rather than last month. While overall consumer spending was up 5.5 per cent year on year (YOY) compared to February 2022, the quantity of items we bought was actually down by -3.5 per cent. That means that, compared to last February, shoppers spent more to buy less. That’s the impact of inflation.

“Online sales also suffered in contrast to last year. The amount we spent online in February tumbled by -3.5 per cent compared to February 2022. Back then, e-commerce took 27.8 per cent of the overall retail spend, compared to 25.4 per cent this year.

“Nonetheless, these latest retail figures are encouraging, pointing the way towards increasing consumer spending as household bills begin to fall. Everyone will be hoping yesterday’s increase in interest rates will mark the final such rise for a while.

“What is certain is that, as retail settles to a new equilibrium, it will be those retailers with strong in-store and online sales that will ultimately triumph in a post-Covid world. ParcelHero’s influential report 2030: Death of the High Street has been discussed in Parliament. It reveals that unless retailers develop an omni-channel approach and embrace both online and physical store sales, the high street as we know it will reach a dead-end by 2030. Read the full report here.