Digital sales exploded during the worst periods of the pandemic. And while we’re seeing the sustained usage of ecommerce, we’re also seeing the steady deceleration in its overall growth as well as its share in overall retail sales.
One place we’re seeing this is in the UK, where ecommerce’s share in retail sales declined by 26% from its sales volume back in February 2020 – when Covid-19 entered the UK.
As the current cost of living crisis continues in the UK – with gas prices soaring as inflation reaches 6.2% in the last 12 months – retail sales have headed in the opposite direction as incomes are squeezed.
In terms of total volume, both in store and ecommerce, goods dropped by 1.4% after falling by 0.5% in February, according to the Office for National Statistics. This was worse than expected by economists, who had forecasted a decline of 0.3%. 
When excluding the sale of fuel then the total volume saw a drop of 1.1%.
In terms of ecommerce’s sales proportion, they slumped sharply to 26%, which is the lowest proportion of overall sales volumes since the beginning of the pandemic in the country back in February 2020.
In part, retail sales were partially offset by a rise in the sales of household goods, driven mostly by second-hand items as well as DIY products.
In another survey, consumer confidence in the UK slipped for five straight months in April as Brits maintain their pessimistic disposition when it comes to their personal finances as well as the general economy.
According to Bloomberg Economics, the downward outlook is tied to the recession, in which wages are falling behind rising inflation – which hit a three-decade high of 7% in March.
Added all together, the economic hit is expected to hit hard living standards across the country.
“We expect consumer spending to come under further pressure in the coming months given the unrelenting squeeze on incomes,” said economist Niraj Shah, who works at Bloomberg Economics. “The cost-of-living crisis is likely to worsen in April, with a hike in energy bills as well as tax increases. We now expect inflation to hit 9% at that point.”
As for the British currency, it is continuing to weaken while interest rates are unlikely to change.
When it came to the drop in retail sales, the fall was led by food, fuel, clothing, and footwear, as record-high petrol prices have been driven by Russia’s invasion of Ukraine. 
“Consumers were forward-looking, which would translate into a period of softer demand growth,” said Catherine Mann, a member of the Monetary Policy Committee of the Bank of England, “perhaps even retrenchment.”
In another survey from the Office of National Statistics, 87% of adults agreed that their cost of living had increased over the last month, with 88% saying that the reason was due to the price of food.
So what about the outlook for retail sales? And how about the broader economy? Much of it depends on the willingness and possibility of consumers to have saved during the pandemic.
“Retailers are themselves squeezed between rising costs of operations, exacerbated by the situation in Ukraine, and weaker demand from customers,” said Helen Dickinson, chief executive of the British Retail Consortium. “Higher global commodity prices, rising energy and transport costs, and a tight labor market, are all taking their toll. As a result, it is likely that retail prices will continue to rise over the course of 2022.”
