Taking the temperature of the economy two years into the pandemic [3]: Are people returning to physical shopping?

As the COVID-19 pandemic hit, people were no longer able to shop in physical stores in the same way as before. This caused a massive relocation of retail towards online channels. Pre-pandemic, internet sales as a share of all retail (excluding fuels) in the UK were around 20%. In February 2021, they reached almost 40%. Some of this change was accompanied by a shift in actual products and services bought — from services, such as restaurants and travel, to goods, such as electronics and other household goods.

Now, slightly more than two years after the pandemic started, the share of online sales remains high. In February 2022, the figure was 28% (black line in left-hand panel of the chart). This is significantly above the level one would have expected had pre-pandemic trends simply continued (blue line in the chart). Various consumer surveys also suggest that some of this change in behaviour may be here to stay: many have found purchasing things on the internet more convenient, more cost-effective, or both, all things considered.

The move towards online retail channels has also happened more or less across the board (right-hand panel of the chart). The biggest change in internet sales took place in goods such as toys, sporting equipment, cosmetics and electronics (“Specialist stores” in the chart), increasing by 6 percentage points, from 13% to 19%. However, even in clothing and footware — were online channels were already well established pre-pandemic — internet grew its share further, from 20% to 25%.

As inflation continues to present a challenge for households’ cost of living, and as mobility patterns have changed, some consumers are likely to stick to these newly formed habits, but will of course continue to seek even further options to buy what they need in an affordable and convenient manner.