The online retail channel recorded a 24.4% sales decline in January after firms competed against a growth rate of 61.8% in the same month last year when the UK was in lockdown and the e-commerce market boomed.
The figure from the IMRG Capgemini Online Retail Index follows 2021 ending on 2.7% total growth, which was the lowest annual rate ever as people returned to shopping in physical stores.
Breaking down last month’s data, the average basket value (ABV) was actually up – rising to £115 in January after dropping to £106 in December. In the first half of 2021, the ABV saw huge increases, but it had been falling since August. January was the first month since then that it has started to go back up again.
At a category level, fashion saw the highest rate of growth in January, with clothing up 5.4% YoY, and womenswear (+25.2%), menswear (+16.0%) and footwear (+19.4%) all reporting positive performances. However, the same was not true for the rest of the categories IMRG tracks. Those with the poorest growth included skincare, which was down 48.2%, makeup (-45.7%), and electricals (-36.7%).
Andy Mulcahy, Strategy and Insight Director at IMRG, commented: “The first quarter of 2021 had a severe lockdown in place which drove huge online growth, so the year-on-year comparisons for the early months in 2022 are going to be harshly negative as a consequence. This can make it seem like online sales are in freefall, whereas actually it is just a natural rationalisation of the 50-60% increases we saw this time last year.”
Lucy Gibbs, Senior Manager, Retail lead for Analytics & AI at Capgemini, added: “January was mixed story for retail; our Online Index reported the largest YoY fall in sales ever, and the high street claimed the opposite. This is due to the now familiar Yin Yang effect on YoY revenues when comparing to last year’s lockdown store closures. As we emerge from the pandemic, the annual results will start to normalise and 2022 will hopefully bring a much more stable trading period, however the outlook still remains uncertain as we realise the fall out of economic and logistical challenges from the last two years.
“The drop in orders this month is greater than revenue as ABV has increased by 24%. This could be an early indicator of increased prices, reflecting the ongoing supply chain disruption and underlying cost challenges. The major purchase index has also fallen four points (GfK) in January, as economic pressures add to consumer concerns. Capturing share of wallet amongst increasing bills and also pent-up demand for travel, events and eating out will continue to prove to be the focus as we navigate 2022.”
NAM Implications:
- Online growth rate still enviable to traditional retailers…
- This says it all for NAMs in 2022: “Capturing share of wallet amongst increasing bills and also pent-up demand for travel, events and eating out will continue to prove to be the focus as we navigate 2022.”
