After encouraging signs in July of a possible bounce back to positive growth, online retail sales failed to make up much ground in August – slowing their fall only slightly to 9.3% year-on-year.
That’s according to the latest IMRG Capgemini Online Retail Index, which tracks the online sales performance of over 200 retailers. However, looking at week-on-week figures suggests things are heading in the right direction with the first week of August down 7.7% versus just 2.9% for the final week.
At a category level, while most continue to report negative year-on-year growth against 2020’s figures, the drops are becoming less dramatic than have appeared previously. Health & beauty remains the poorest performer – down 32.8% versus last month’s 36.1% fall. Bucking the trend, beers, wines & spirits (+26.8%) and garden (+40.1%) continued to do well throughout August, with clothing also managing to remain in the positive with growth of 10.3%.
Other notable spending trends in August include the Average Basket Volume (ABV) reaching its highest average for 2021 at £149. This was mainly driven by sales in home & garden and electricals, perhaps due to customers switching their cancelled holiday spend for big-ticket items. However, conversion sunk to its lowest rate this year at 3.14%.
Lucy Gibbs, a Managing Consultant at Capgemini, said: “Online sales growth continued on its negative trend this month. Interestingly, this was mainly driven by a 7.3% drop for multichannel retailers, with online only retailers actually recording a growth of 1.7% in August compared to July. This could indicate that multichannel retailers are focusing their efforts to get consumers into their shops again, given that consumer confidence has reached pre-pandemic levels for the second month in a row according to GfK’s Consumer Confidence Index.
“Other factors that could be affecting online shopping volumes and driving down conversion rates, which have dropped 23% compared to last year, are the recent supply chain challenges worldwide resulting in stock shortage and delayed delivery timelines, resulting in out-of-stocks on e-commerce websites and worse customer delivery times.”
Andy Mulcahy, strategy and insight director at IMRG, added: “There is some evidence that supply issues are exerting an influence over online trading. For several months running now, the average basket value has been up significantly on the same periods last year, meaning people are spending more per transaction than was the case previously. With conversion dropping, it suggests people are encountering out-of-stock items or not finding what they were looking for, but when they do find something in stock, they buy it without shopping around for a better price.
“A lower reliance on discounting to drive sales is interesting in the build-up to Black Friday – the discounting event of the year. It does seem highly likely that whatever a retailer’s plan for Black Friday stock was back in January, there will need to be some adaptation if they can’t get the right products in time to fit their campaign plans. It could be a year where stock runs down quickly, so retailers will need to be conscious that they don’t overpromise and end up frustrating customers.”
NAM Implications:
- The most concerning aspects of post-Lockdown online are stock/availability shortages….
- …with consumers prepared to pay, but possibly resenting the need?
- Key will be managing expectations re availability…
- …and keeping fingers crossed.
