Online sales take 8% hit as cost-of-living crisis begins to bite

Online sales took a heavy hit last month, dropping by almost 8% as the cost-of-living crisis started to bite, according to the latest figures from the Office for National Statistics (ONS).

The data for March, released today, revealed that retail sales volumes fell by 1.4% in March – faster than the 0.5% drop in February. Online sales bore the brunt of this fall, dropping by 7.9% as shoppers began to restrict unnecessary purchases. This fall followed on from a 6.9% drop in February.

The proportion of retail sales being made online also fell to 26% in March 2022, its lowest proportion since February 2020 (22.7%). This follows the broad downward trend since it peaked at 37.1% in February 2021.

Despite this, online sales volumes remained 20.3% above their pre-coronavirus February 2020 levels, indicating a permanent shift towards online driven by the pandemic.

The ONS suggested that the recent drop in online sales is likely to be due to the end of lockdown restrictions and shoppers feeling confident about returning to stores. This is compared with increases of 4.5% in January 2022 and 2.3% in December 2021, when strong online sales may have been linked to consumer concerns about the Omicron variant which was surging across the country.

Read more: Shift to ecommerce is set to stay as 28% of all retail sales remain online

It also warned that some of the fall in February and March 2022 may be “linked to affordability concerns”. It pointed towards recent surveys which found 54% of adults reporting spending less on non-essentials due to an increase in the cost of living.

ONS’ director of economic statistics, Darren Morgan, said: “Retail sales fell back notably in March, with rises in the cost of living hitting consumers’ spending.

“Online sales were hit particularly hard due to lower levels of discretionary spending.”

Analyst at global financial services firm Ebury, Cornelius Clark, added:  “The headline falls in both the overall volume and the proportion of shopping done online are striking, but the value of ecommerce trading still sits more than 20% above its pre-pandemic level.

“The boom in online shopping is a structural change… companies still need to invest in the technology and financial infrastructure needed to provide a high-quality experience for online shoppers to remain competitive.”

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