New ONS retail figures show the impact of price inflation on the High Street, while online sales have stayed firmly at 26% of all retail sales for the past year. The home delivery expert ParcelHero asks when will food prices start to fall, and why has it taken so long for Boohoo, ASOS, Ocado and subscription services to change course?
Despite High Street and online sales increasing, April’s retail sales figures, released today by the Office for National Statistics (ONS), are worrying for shoppers and retailers alike, says the home delivery expert ParcelHero. Overall sales volumes were up 0.5% against the previous month but the amount we spent jumped 1.1% because shop prices continue to climb.
ParcelHero’s Head of Consumer Research, David Jinks M.I.L.T., says: ‘April’s retail results show that, year on year, we all bought fewer items but spent more money. Sales volumes this April were 3% lower than in April 2022, but the amount we spent was up 4.7%. That’s largely because of increased food prices.
‘We may all be forgetting the impact of Liz Truss and Kwasi Kwarteng’s ‘Kamikwasi’ Budget, but our wallets and purses haven’t. When compared with their pre-Covid level of February 2020, total retail sales were 16.5% higher in value terms, but volumes were 0.8% lower. This month, general inflation levels have fallen to 8.7%, with even energy costs falling. But food price inflation is still soaring at 19%. The ghosts of Chancellors past are still having an impact.
‘The other serious concern in this month’s retail figures is that online has now held firm at 26% of all retail spending since May 2022. That’s a year of consistency. Yet the online-only fashion expert Boohoo has posted losses of £90m for its latest financial year and ASOS has also revealed an adjusted loss of £87.4m in the six months to 28 February, following an annual loss of almost £32m in the 12 months to August 2022.
‘Of course, in the chaos of Covid lockdowns, it’s easy to see why online sales rocketed from 19% of the retail market pre-pandemic to capture 37% of all sales in February 2021. Many online retailers grew overexcited at this point, overextending both in terms of increased staff and stock, and in commissioning new distribution centres. But since that highpoint, 26 months ago, online sales fell sharply for a little over a year and, since then, haven’t budged as a proportion of all sales. So why has it taken so long for the UK’s online giants to turn the ship around? Online stores need to be more agile in responding to market changes. When the online clothing market fell, fast fashion stores should have cut their cloth accordingly.
‘Similarly, subscription services were slow to wake up and smell the gourmet subscription coffee. During lockdown, many households increased their number of subscriptions from two or less to five. However, last year, 7 in 10 Brits cut their subscriptions to beauty/home grooming, food boxes, entertainment, etc, following the end of the lockdown boom. No one has £13 a month or more spare to commit to monthly coffee orders anymore.
‘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. By integrating both, retailers can survive the retail slump. ParcelHero’s influential report “2030: Death of the High Street” has been discussed in Parliament. It reveals that, unless retailers develop an omnichannel approach, embracing both online and physical store sales, the High Street as we know it will reach a dead-end by 2030.
