Adobe Analytics: Online spending growth slows to 1.5% as sharp rise in grocery prices suppresses discretionary spending
Data from Adobe, powered by Adobe Analytics, reveals that Brits spent £8.1 billion online in April 2024, a modest 1.5% increase on the £8 billion spent in April 2023. 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.
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 typical worker.
“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,” said Vivek Pandya, lead analyst, Adobe Digital Insights.
Additional Insights Include:
Online spending growth slowing
- This is the sixth consecutive month that Adobe Analytics has recorded YoY growth in UK online spending, however that growth has been tapering since the end of February (Jan +3.4%, Feb +5.0%, Mar +3.7% , Apr +1.5%).
- This represents the longest sustained period of YoY growth since January 2022, wherein 20 of the last 28 months recorded decreases in online spending on an annual basis.
Grocery prices see 9.8% spike
- Adobe’s data shows notable price increases in a number of sub-categories contributing to a 9.8% YoY rise in grocery prices in April, with coffee, oils, sugars/sweets, cocoa, bakery products as well as fruits and vegetables all seeing significant upticks in price, and milder increases observed in cheese and ice cream.
- Adobe’s online price data aligns with a number of notable information sources, with the World Bank, the International Monetary Fund (IMF) and United Nations (UN) all observing rises in agriculture costs and price increases in multiple sub-categories.
Is Buy Now Pay Later usage starting to plateau?
- 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.
- In April, consumers financed 16.1% of total online spending (£1.3 billion) through BNPL services.
About Adobe Digital Insights
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 to provide the most comprehensive view of the UK digital economy. Adobe Analytics is part of Adobe Experience Cloud, relied upon by major retailers to deliver, measure, and personalise shopping experiences online.