Following a strong Christmas sales period, retailer hopes of a continuation of such growth into 2020 were dashed in January, with online retail sales falling 0.4% year-on-year.
Breaking down the results from the IMRG Capgemini Online Retail Index, there were a few positive stories at a category level. After a consistently strong 2019, beauty continued to be one of the best performers in January, although its growth of 7.1% was relatively subdued in comparison to its average growth of 23.3% in 2019. Meanwhile, both home and clothing also saw increases of 6.1% and 3.1% respectively.
That was largely where the positivity ended. In perhaps the strongest indication of the Black Friday effect and the impact of end-of-year discounting on the traditional January sales period, electricals sales plummeted from their first positive performance in over two years in December 2019 (+11.9%) to -17.7% in January.
Andy Mulcahy, strategy and insight director, IMRG: “2019 was an odd year for online sales in the sense that demand was weak for most of the year – particularly over the summer – but then growth throughout November was very strong and December was better-than-expected too. It’s hard to see why that kind of peak trading would cap such a poor year, so the question was whether that represented a turnaround in demand – given the greater certainty emerging in the political environment during that period – or an anomaly, probably driven by discounting.
“It seems that we now have our answer. Flat growth to start the year, against a modest growth rate of +7% in January 2019 (which itself was the lowest for January in three years) suggests that it wasn’t just uncertainty over Brexit that was suppressing spend; the real reasons are likely to be multiple and diverse, requiring fundamental appraisals of retailer propositions to ensure they are well set up for success in this fast-changing market.”
