Saturday 20 January 2018

Shops feel the pinch as online sales surge due to fall in sterling

Consumers find it more attractive to shop on UK sites as the fall in the value of sterling relative to the euro makes it cheaper to buy online. Stock Image
Consumers find it more attractive to shop on UK sites as the fall in the value of sterling relative to the euro makes it cheaper to buy online. Stock Image
Charlie Weston

Charlie Weston

Sales in shops declined for a sixth month in a row in March as consumers continue to exploit the Brexit bonus and pour money into buying online.

The Visa consumer spending index shows an 18pc surge in online spending in the first four months of the year, but buying in shops was down by 2.4pc.

The rise in online spending in March was the strongest reading this year so far.

The fall in the value of sales in shops is despite a drop in the price of groceries in shops here due to the Brexit bonus which has come about due to the fall in the value of sterling.

Consumers find it more attractive to shop on UK sites as the fall in the value of sterling relative to the euro has made it cheaper to buy online.

Shoppers spent less on clothing and footwear in the year to March.

Hotels, bars and restaurants have also taken a hit.

Overall spending, measured in the use of cash, cheques and electronic payments, was down 4.2pc in March when compared with the same month last year, according to Visa.

However, there was a rise in spending on transport and communications, with outlay hitting a four-month high.

Also up was consumer spending on recreation and culture. "Irish consumer spending continues to rise, albeit at a reduced pace, with March recording the sixth month in a row where the rate of growth was less than 5pc," said Philip Konopik, Visa Europe Ireland country manager.

He said that while this was positive, there was cause for concern in two areas.

"Face-to-face spending has been in decline for the past six months and the clothing and footwear sector is particularly challenged. The ongoing bus strike has impacted regional businesses and it could hold face-to-face spending back," he said.

Economist Andrew Harker, at IHS Markit, who helped compile the Visa spending index, said that shops had been seeing a protracted fall in sales.

He said: "There is still little sign of a recovery on the high street, with face-to-face spending now in a protracted downturn, and so e-commerce is having to drive growth at present."

He added that consumer confidence remained muted.

The figures show a 2.5pc rise in spending in the first three months of the year, when compared with the same period last year. But the rate of growth slowed for the third quarter in a row, Visa said.

The fall in spending in shops is despite Brexit providing a boost to consumers as it is now cheaper to import groceries from Britain.

The weaker pound is now making the euro in your pocket stretch further.

The grocery market has slipped into deflation for the first time in almost two years, meaning that the same basket of shopping is costing less at the tills.

Meanwhile, trade body Retail Excellence said it had partnered with Facebook to provide training and support for 110 member retailers across different sectors, including fashion, food, pharmacy and more. The aim is to get retailers to use the likes of Facebook, Instagram and Messenger to promote products in a bid to generate more sales.

Irish Independent

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