Sluggish pace of growth and high levels of inflation in essential items a cause of concern for many UK online retailers

Brits spent £8.1 billion online in April 2024, a modest 1.5% increase on the £8 billion splashed out in April 2023, according to research from Adobe, powered by Adobe Analytics.

While this is now the sixth consecutive month of year-on-year growth in online spending, that growth has slowed every month since February, which will be a cause of concern for many retailers.

Adobe’s analysis of online transactions in the month of April identified a surprising and significant 9.8% YoY rise in grocery prices, which put a squeeze on households’ discretionary spending and likely contributed to the overall slowdown in growth.

As they did for much of 2023, retailers across non-essential categories have turned to discounting in efforts to stimulate demand, with the steepest YoY price drops seen in electronics (-11.7%), apparel (-10.0%), and appliances (-5.5%).

These categories 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. 

Buy now pay later services, which have increased year-on-year every month since January 2023 (when Adobe began tracking), were flat in April 2024 when compared with the same period in 2023 at £1.3 billion, accounting for 16.1% of total spending in April 2024.

In more positive news, online spending in April 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 as consumers feel the benefit of new changes to the living wage, universal credit payments and national insurance cuts, which the government estimates will provide a £900 a year boost for the typical worker.

Vivek Pandya, Lead Analyst, Adobe Digital Insights at Adobe, says: “While this period of sustained growth in online spending gives some respite for retailers who have struggled over the past two years, the sluggish pace of growth and continued high levels of inflation in essential items shows the sector is not out of the woods yet.”

“Retailers will be hoping that the acceleration in spending in the last week of April will carry forward as we approach the summer months.”

The Adobe Digital Insights team used Adobe Analytics to analyse hundreds of millions of visits to retail sites from UK consumers in April, tracking 100 million stock-keeping units (SKUs) across 18 product categories.