UK ecommerce grew 18.8% year on year in April according to the IMRG, the British online retailing body. However, according to the ONS (Office for National Statistics) it fell slightly on the previous month.
One aspect of this news that is of particular interest is that Easter occurred entirely in April last year and that usually sees an increase in shopping. The IMRG concludes that this encourages them to think that is not a “blip”.
Growth in online retail sales revenue has been markedly higher than expected throughout 2018 so far. One reason is likely to be related to a turnaround in economic fortunes – while inflation outstripped wage growth for most of 2017, the gap has closed in recent months and wag growth was actually higher than inflation in March 2018. This means that, one the whole, UK shoppers should be feeling a bit more confident in making purchases.
– Andy Mulcahy, strategy and insight director, IMRG
The May results will therefore be of particular interest. They will give an indication whether April represent an acceleration trend, which would be most welcome.
In recent months the challenge that UK ecommerce represents to traditional retail has been illustrated by several incidents. Both Marks & Spencer and Dixons Carphone are shutting a significant number of stores. Sainsbury’s is also taking streamlining measures. Mothercare, Carpetright and New Look will also be closing stores. Debenhams is reducing the the size of some of its shops.
But it’s not just online retail that is posing the threat to high street chains. Carphone Warehouse said that part of their problem was that customers aren’t updating their handsets as frequently as they once did.
But even as an online retail enthusiast, there’s no doubt that a vibrant, thriving local shopping area is vital to communities because high streets fill a social function as well as a commercial one. One idea that comes around every now and again is that of an online sales tax, although it’s never entirely clear how such a charge would work.
Recently the EU commission proposed a tax on the online turnover of big tech firms. And one Conservative MP Neil O’Brien has said that proceeds could be used to cut taxes for small businesses. Currently, there is no specific proposal on the table.