The retail sector today becomes the latest to report that they see no signs of an economic recovery on the horizon.
The February edition of the British Retail Consortium's (BRC) retail sales monitor shows that overall spending is up 2.3 per cent on last year, but taken on a like-for-like basis (a measure that excludes shops which have opened or closed in the past year, removing variation in floorspace as a source of change) it has dropped by 0.3 per cent.
KPMG co-publish the report, and their head of retail, Helen Dickinson, said:
Consumers remain reluctant to spend unless encouraged by promotional activity. Thus, while the market is still growing slightly in headline sales terms, profitability continues to be eroded through loss of margins.
The growth in non-food non-store sales - mail order, phone, and, increasingly, internet - dropped from earlier months, but still far outstripped the headline figures. At 9.9 per cent year-on-year, even a bad month still represents a strong future for the subsector.
Tolstoy wrote that each unhappy family is unhappy in its own way, but while each troubled big-box chain has a unique story, there’s a common enemy: the Internet.
Online retail sales this past November and December were up 15 percent compared with late 2010. In the third quarter of 2001, e-commerce sales were 3 percent of all retail (including food) sales in America. By the third quarter of 2011 (i.e., before the Christmas surge was fully incorporated into the data), that was over 12 percent. The move toward online shopping is relentless, driven by both convenience and the ability of Web-based retailers to largely avoid paying sales taxes. As mobile devices become even more useful for shopping, online retailers will grow faster.
The director general of the BRC, Stephen Robertson, doesn't quite agree with Yglesias' analysis, saying:
Online continues to grow faster than any other retail channel but the rate of increase in sales has slowed since Christmas and is well down on the kind of performance that was typical in 2010 and before.
Non-food sales have been worst affected by customers’ continuing fears about their own finances and prospects. That’s being felt online as well as in stores but the slowing of online growth may now also be reflecting some maturing of the market.
Whether or not the online sector is reaching maturity is precisely the issue at hand. It does seem like there is an element of wishful thinking on the part of Robertson, since year-on-year growth of almost 10 per cent is hardly representative of a mature industry.
But to see whether there is a genuine threat to brick-and-mortar retail, we'll have to wait until the sector as a whole regains its growth. If a significant proportion of the recovery gets taken up by the online outlets, then the rest of retail will really have to start worrying, and to know that requires a recovery which has been a long time coming.