UK online sales growth slows, fashion struggles, BNPL is flat

Online spending growth in Britain slowed to just 1.5% last month as a sharp rise in grocery prices suppressed discretionary spending, new Adobe Analytics figures have shown.

The data also showed that spending via Buy Now Pay Later (BNPL) services was flat year on year for the first time.

Britons spent £8.1 billion online in April and although that’s the sixth consecutive month of year-on-year growth in e-spend, the growth has slowed every month since February.

So why is this? As mentioned, high grocery prices could be taking their toll. Adobe’s analysis of online transactions “identified a surprising and significant 9.8%” annual rise in grocery prices, “which put a squeeze on households’ discretionary spending and likely contributed to the overall slowdown in growth”.

Those market conditions meant that, as for much of 2023, retailers across non-essential categories didn’t have the option of raising prices and turned to discounting in efforts to stimulate demand. Among the steepest price drops was apparel (-10%), one of the categories that “may also be feeling the effect of new entrants’ presence in the market, as retailers try to compete with the low prices offered by the likes of Temu, Shein and AliExpress”.

As we said, BNPL — which has increased year-on-year every month since January 2023 (when Adobe began tracking) — was flat in April at £1.3 billion, accounting for 16.1% of total spending.

But in more positive news, online spend accelerated in the last week of the month, up 3.4% on the same period in 2023. Retailers will hope that momentum carries into May.