New industry data confirms that the coronavirus lockdown last month resulted in a seismic shift in purchasing patterns. With bricks & mortar stores mostly shut, online sales growth in April jumped 23.8% year-on-year – a 10-year high for the IMRG Capgemini Online Retail Index, which tracks the online sales performance of over 200 retailers.
The data shows that the spike in sales was overwhelmingly driven by multichannel retailers. After recording higher growth than their online-only counterparts for the first time in a year in March, multichannel retailers continued to benefit from consumers’ changing shopping habits – with sales up 35% versus online-only retailers’ more modest rise of 8.3%.
Breaking down the figures at a category level, the hot April weather (combined with lockdown) triggered an exceptionally strong rise in gardening sales. Building upon March’s 94.4% year-on-year growth, last month’s sales soared 288% higher.
Meanwhile, electrical sales jumped 102% – boosted by remote working requirements and demand for at-home entertainment products. Further to its success in February and March, the health & beauty category saw sales climb 82%.
However, the story was not so positive for the clothing sector, with sales plummeting 23.8%.
Andy Mulcahy, strategy and insight director at IMRG, said “April’s data shows that demand is following a very logical pattern – with stores closed, people who would usually shop in physical locations have no choice but to switch online. Hence it is the multichannel retailers who are securing the very strong growth at the moment, though whether it will be enough to entirely offset the loss of sales from those stores seems unlikely.”
Lucy Gibbs, Managing Consultant for Retail at Capgemini, added: “We are also starting to see a differential by retail tier, with mid-market losing out to budget retailers, a trend to watch as consumers seek value for money in uncertainty. However, on the other hand we are likely to see consumers looking for brand trust and quality. This can result in a squeeze in the mid-tier where appealing to both needs has been traditionally harder to balance.
“Retailers will need to listen to their customers, and find new ways to become increasingly transparent, flexible and innovative in order to navigate the rocky and uncertain road ahead.”
NAM Implications:
- Key is how your sales compared with the growth rates by retail tier.
- Time to reposition your offering more precisely by tier:
- Budget
- Mid-market
- Brand trust and quality
- Makes sense for NAMs to favour retailers that are transparent, flexible and innovative.
