In late July, the Office for National Statistics (ONS) produced a short article on economic trends in GB in the retail sector since 1989, examining how retail sales fit in with the wider economic climate, including over time, long-term trends seen, recent growth rates and some international comparisons.

As we are all aware the retail sector is a large component of the national economy.  Since 1989 the volume of retail sales has doubled compared to a 17% rise in population and a 68% rise in household disposable income per capita.  Within this headline doubling there are both consistencies and massive alterations.

The food sector remains the largest sector, though of course its make-up has changed since 1989 in terms of the size and location of stores, the range of products carried and the development into discount and convenience operations.  Between 2013 and 2019 there was a slight decline in the food sector, but this reversed during the pandemic and the boost food stores had through differential lockdowns.

Elsewhere in other sectors, the equipment, games and toys sector grew very strongly (451%) whereas alcohol and tobacco volumes have fallen (76%) as have books, newspapers and periodicals.  The latter sector has of course moved considerably online (and e-books are classified as a service so not in the retail sector here).

This rise of non-store sales is of course the marked story over the period since 1989.  But the article notes that this is not an even pattern with non-store sales halving to a low of 4.4% of retail sales in 2003.  Now, and pandemic accelerated, the figure for this measure in this series is 16.5% in 2020.  Online retail sales (a different measure to non-store sales) have increased from 3.4% of all retail sales in 2007 to 27.9% in 2020.

Perhaps suprisingly the increase in total spend online and in-store since 2007 has moved in a broadly similar way, until the pandemic (see figure from article below).  This perhaps counter-intuitive result (if the belief is a switch/substitution effect to pure online from in-store) is ascribed by the ONS to the rise in total population and household income, shifting convenience store patterns and the increase in retail sales overall in value terms.

The international comparisons show quite remarkable divergence.  In the countries examined, the UK and the Netherlands stand out for online retail growth between 2000 and 2020.  Overall (i.e. all retail) the UK, Canada and France saw the greatest rises in retail sales volumes between 1995 and 2021, in start contrast to Japan and Italy where retail sales have shrunk.

This is a very short article and perhaps there is not a lot in it that will come as too much of a surprise to many.  It is very useful though, and interesting to see the long-term changes and to put some data on some sector and international comparisons.

ONS (2021) Economic trends in the retail sector, Great Britain: 1989 to 2021.  Available for download at: https://www.ons.gov.uk/economy/nationalaccounts/balanceofpayments/articles/economictrendsintheretailsectorgreatbritain/1989to2021