Is The Source of Retail Economic Growth Shifting?

A survey released this week suggests that the UK experienced a record amount of online shopping this Christmas. At RTA Business this has made us question whether the source of retail economic growth is shifting online.

Retail has always formed a major element of economic growth. This is one of the key reasons politicians give when they attempt to slash taxes; that more income means more spending which means more cash injected into the economy.

Furthermore this is a tactic governments and big business themselves use when attempting to shore up the economy and rescue their profit margins. Following the 2008 economic crash the government developed several schemes such as Help to Buy and the Green Deal designed to inject fresh cash into flagging markets.

Christmas is the Superbowl of shopping. The commercial nature of the season, the idea of gift giving, inspires the general public to shop. Businesses know this, and as such ad campaigns and special offers are put in place like never before.

However this last Christmas revealed some surprising details. Retail giants such as Sainsbury’s, Morrison’s and Tesco sold significantly less than usual during the lucrative season. Considering that many of these large retailers make a significant portion of their profits at this time, this is a somewhat worrying conclusion.

However online sales were stronger than ever this Christmas. Overall there was a 19.2% growth in the rate of internet purchases over the Christmas season. In contrast UK retail sales rose by just 0.4% on a like-for-like basis.

In more detail; online shopping accounted for 18.6% of the total of sales not involving food in the closing month of 2013. This was an almost 2% increase from 16.5% in 2012.

The survey was conducted by the BRC and the group’s Director General Helen Dickinson spoke to the BBC on what their results could mean. She said that "this Christmas we've seen innovative retailers using click and collect and other approaches to make a virtue of both their website and their physical shops. And that's something we see growing in importance."

At RTA Business we understand the point Dickinson is making, business growth in the modern world happens online. Online sales platforms are emerging in importance; customers appreciate the convenience. It is likely that as online platforms evolve in sophistication, it could affect the very way we measure business growth.

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