It wasn’t supposed to turn out this way, not at the beginning of the year when the wise and good were confidently predicting that Brexit-bound Britain would turn out to have the worst economy in the developed world in 2023. The UK economy would be contracting, they said, while almost everyone else’s expanded.
We have had enough of trying to buy clothes online, though we are happy to buy other stuff in this way
Now, as Germany descended officially into recession this week, more evidence emerges that Britain, so far, has avoided the same fate. The Office for National Statistics’ retail figures for April show that sales volumes were up 0.5 per cent on the month. This needs to be read in conjunction with March’s figures, which were revised downwards to a fall of 1.2 per cent (the first estimate put it at a fall of 0.9 per cent). But if you smooth out the volatile monthly figures, sales were still up 0.8 per cent over the three months to April – not fireworks, but not recession territory either.
Unsurprisingly, given high inflation, there has been a divergence between how much we are spending and how much we are actually buying. Over the past 12 months, spending is up 4.7 per cent but volumes are down 3.0 per cent. In other words, we are getting less for our money. As for the longer-term picture, retail sales volumes are still down 0.8 per cent on what they were in February 2020, on the eve of the pandemic.
At the beginning of the pandemic it was widely predicted that lockdowns would change the picture of retailing forever, speeding up the shift to online retailing. How is that going? The story that seems to be emerging is that we have had enough of trying to buy clothes online, though we are happy to buy other stuff in this way. Over the past 12 months, sales volumes in physical clothing and footwear stores was up 4.5 per cent, while sales in physical household goods stores were down 3.4 per cent. Online sales – there is just one figure to cover all categories – were up 2.8 per cent.
It is perhaps not altogether surprising if the shift to online clothes sales has hit the buffers. Trying to buy your clothes online suffers from a very big handicap: you can’t try them on before your buy them. You can try them on at home and send them back if they don’t fit, but that takes time, bother – as well as pliant retailers and an efficient postal service. That is what we have been lacking in recent months as strikes by postal workers have reduced deliveries, which are anecdotally down to once a week in some areas. At the same time, retailers are starting to push back against the volume of returns they are having to handle.
For another measure of the fortunes of online clothes retailing, look at the ASOS share price. On the even of the pandemic the company was struggling a bit with its share price dipping to 1,200 pence. Then, come Covid, it was boom time. From the middle of 2020 until the middle of 2021 the shares were trading at over 5,000 pence. Today, they stand at 430 pence as the company struggles with high levels of returns. It is a similar story at Boohoo. Online retailing can still be expected to grow over the coming years, but the death of physical stores are been greatly exaggerated.
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