Ecommerce was “one saving grace” for UK retailers last month amid surprise drop in sales

Online sales were the “one saving grace to retailers” last month as retail sales fell sharply taking analysts by surprise.

According to the latest figures from the Office for National Statistics (ONS), retail sales fell 2.5 per cent in July month-on-month, coming well below average analyst estimates of 0.4 per cent growth.

This marked the weakest performance for overall sales since shops reopened in April, which the ONS’ deputy national statistician for economic statistics Jonathan Athow attributed to the widespread reopening of restaurants hampering grocery sales and poor weather conditions.

Despite the overall drop, online retail sales continued to perform strongly, seeing the percentage of total sales made online increase to 28 per cent, up from 20 per cent in February 2020.

Alvarez & Marshal’s retail and consumer practice lead Erin Brookes said retailers should now consider “footprint consolidation”.

“The ongoing shift towards online raises serious questions concerning how retailers can maintain a profitable physical footprint as online sales penetration continues to increase,” she said.

READ MORE: Online sales growth set fall to just 0.1% next year

“Following extended periods of lockdown, its unsurprising to see that people are now spending more online and many businesses have developed their digital offer to match this trend. Now is the time for retailers to get very clear on the role of their physical stores to deliver sustainable levels of footfall or to look to footprint consolidation.”

Hargreaves Lansdown’s personal finance analyst Sarah Coles believed the wet weather was largely responsible for online retails continued performance, despite driver and chip shortages impacting entertainment sales.

She explained: “Online shopping was a beneficiary of our reluctance to leave the house for entertainment. Sales rose again, pushed up particularly by sales in department stores. We didn’t fancy leaving the house, so we decided to fill it with a bit more stuff.”

Accenture’s head of retail Lynda Petherick added: “Whilst July may not have been able to hold onto the momentum of overall sales growth triggered by the start of the Euro’s in June, the continued growth of online sales came as the one saving grace to retailers.

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