As regular readers of this blog will know, the pandemic has boosted e-commerce all over the world and in almost every sector. The UK’s retail sector is no exception. Many had predicted that the growth of retail sales would stall in October, but this did not turn out to be true. In fact, sales rose 1.2% from September and were up almost 8% from the same month last year. But how is this industry still growing despite the pandemic and severe financial worries gripping the nation? This article will outline the figures on the ONS report on retail, before going on to explain just how these figures keep rising.
What Do The Figures Say?
Staggeringly, all measures in the total retail sales industry saw an increase in October 2020. The monthly growth rate for value sales was 1.4% and for volume sales 1.2%. This was the sixth consecutive month of growth. This meteoric rise has resulted in value and volume sales 5.2% and 6.7% higher respectively than in February 2020, before coronavirus (COVID-19) lockdown restrictions were applied in the UK.
In the three months leading to October, value sales increased by 9.2% and volume sales by 8.9% when compared with the previous three months.
Unfortunately, two of the main industries that have not been able to show the same amount of growth are clothing and fuel. Clothing had been steadily recovering, but October saw that progress stall, whilst fuel has been struggling since the pandemic started. In the case of clothes, it is probably because people are going out less and working less, and thus they are not needing work clothes or special attire, whereas in the case of fuel, people are simply not commuting as much.
Where Does E-commerce Fit In?
Quite simply, e-commerce is propelling the growth. Shoppers have spent 60.1% more online than they did last October – and 5.7% more than last month. More than a quarter (28.5%) of all UK retail sales were made online in October. That’s more than the 27.5% of sales made online in September and well ahead of the 20.1% of sales made online in February 2020. Whilst these are impressive increases, it is worth bearing in mind that these figures are lower than peaks of 33.3% in May and 31.8% in June.
Some were predicting that the growth of e-commerce might have been about to settle down, but Novembers lockdown suggests that e-commerce might grow even more. The growth of the industry is most keenly felt in groceries, as grocery sales almost doubled (an increase of 99%) from October 2019. Such is the significance of this increase, it is likely that these figures represent a permanent shift for at least a considerable portion of consumers.
How Should You React?
If you are a business owner, the message is clear: e-commerce is the way forward. Bearing this in mind, it is obviously worth making sure that all you digital platforms are up to date and user-friendly. However, a big problem that will be facing suppliers will be deliveries. Capacity in the delivery network will be close to full proximity until the new year. In order to compensate for this, it is perhaps wise to limit the use of next day delivery as much as possible. Further, some experts are suggesting the use of out-of-store click-and-collect locations. This means you can take a lot of your orders at once to one location, saving time and money. Since we are still in the midst of the pandemic, no-contact delivery options like these are made even more viable.
As for consumers, the best option is to order your goods as soon as possible in order to ensure that goods reach you before Christmas. It is likely that this is already being done, since people doing their Christmas shopping earlier this year would account for some of the increase we have seen in sales in October.
Conclusion – E-commerce Is Here To Stay
Clearly, October has been a strong month for the retail and e-commerce sector. Whilst many are predicting that this trend will begin to stagger in November, the significance of the current lockdown and Christmas shopping cannot be overlooked – don’t be surprised to see the growth continue. Click here to see the figures from October in full.
Here at J & P Accountants, we understand that the prospect of trying to comply with all those tax regulations and logistic calculations can be daunting in the festive period. But that’s where we come in.
If you are a business who participates in cross border e-commerce, we would be more than happy to help you register for VAT, file your VAT returns, and help you comply with VAT in case your account faces any issues. At J&P, helping your business is our passion, and we understand that companies across the UK are at risk now more than ever. We are here to support you through the Coronavirus crisis and the busy festive period, so please do not hesitate to give us a call on 0161 637 1080 or send an e-mail to firstname.lastname@example.org