September 8, 2021

ONS reports steepest ever decline in Ecommerce

Dr Peter Mowforth

The ONS data

The UK Government Office of National Statistics has reported a sharp decline in ecommerce. Between January 2021 and June 2021, UK retail ecommerce shrank from being 36.5% of all UK retail to 26.2% of all retail. This represents a decline of 10.3% of all retail in just six months. This is the worst drop in UK ecommerce business since records began.

Are we doomed? Let’s take a more detailed look.

Between February 2020 and May 2020, ecommerce grew from 19.1% to 32.8% of UK retail. That represented a growth in ecommerce of 13.7% of total retail in a mere three months i.e. a much larger swing in only half the time.

The most likely explanation for the recent drop in ecommerce is simply balancing out the earlier increase that happened at the start of the Covid lockdown.

Fitting a regression line to the pre-lockdown data indicates that the recent decrease in ecommerce has ended up leaving us around 4% ahead of where we might have been if no disruption had occurred.

Before 2020, ecommerce growth statistics from around the world had all shown steady and highly predictable growth over a couple of decades. What we can all agree on now in that the last couple of years have been anything but predictable. The impact of both Covid and Brexit have caused (and will continue to cause) major disruptions to business that will probably take at least 12 to 24 months to normalise.

While Covid and Brexit will remain the two largest factors, other unpredictable variables whose outcomes cannot be predicted include:

  • Further potential lockdowns.
  • New agreements on trade relations with other countries.
  • Freeports and related investment.
  • A shift away from consumerism.
  • Scottish Independence.

What is clear is that business is in for, and will continue with, it’s rocky ride for at least another year or two - and probably longer. Anything that might help provide business with an informed short-term outlook will become a significant tool to help manage and run businesses. This could be crucial for decisions involving supply chain purchasing or investment. To assist with this, INDEZ is in the process of developing an Ecommerce Weather Report to help business owners with forward forecasting. Watch this space for announcements.

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