Online retail sales in the UK recorded their lowest-ever level of year-on-year growth in July this year, failing to maintain the positive momentum of improved sales in June.
According to the latest IMRG Capgemini eRetail Sales Index, which tracks the online sales performance of over 200 retailers, online sales grew by just +4.4% YoY in July and fell by 5.7% month-on-month. The figures, which came despite the scorching weather and notable online shopping events like Amazon Prime Day, were well below the 3-month, 6-month, and 12-month rolling averages (+4.9%, +4.9%, and +6.5%, respectively).
Even the hottest day of the year did little to boost categories like BWS and home & garden, both of which recorded negative growth in July. With no World Cup to spark celebrations and commiserations, BWS was down -19.7% compared to its strong performance last July (+32.9%). Garden sales also fell by -44.6% (compared to +22% in 2018), contributing to a low overall growth for home and garden of +5.4%.
Meanwhile, clothing sales followed a similar pattern to the overall result, with positive growth of +4.5% failing to match June’s 2019 high of +15.7% or the 5-year average of +8.6%. After recording its strongest performance of the year in June (+31.2%), menswear saw a significant drop in growth to just +10.4%. Meanwhile, both accessories and womenswear were down (-13.3% and -8.7% respectively), and womenswear saw its average basket value decrease by a third compared to last year.
Andy Mulcahy, strategy and insight director at IMRG, said: “Online sales growth had been subdued throughout the first half of 2019, but in June there seemed to be a bit of a bounce-back that hinted toward growth picking up again. However, there is now evidence that the June performance was artificially inflated by heavy discounting to stimulate sales activity, and it seems likely that some of that volume was pulled forward from July. There is usually a dip between June and July, but this year it was down -5.7%, a sharper decline than the five-year average of -1.1%.”
Bhavesh Unadkat, principal consultant in retail customer engagement at Capgemini, added: “Over the last three months pure online retailers have fared better than multichannel players online, maintaining consistent growth above +8%. This compares to a much more volatile performance, jumping from -0.1% to +8% in May to June, and +4% in July, indicating that multichannel online sales are more sensitive to sales activity as consumers seek out the best deals.
The outlook remains uncertain for retailers into half two as consumer spending is cautious and confidence low, yet GFK has reported that the major purchase index has increased six points back into positive territory this month. This could hint that customers will be more willing to make considered purchases over the coming months rather than impulse buys.”
NAM Implications:
- Could we be coming to the end of the first flush of online…
- Worth exploring the implications for your business…
- …even if original growth rates are resumed.
