UK online retail sales growth at record lows

Dec 6, 2019 | E-commerce

Reaching stability? Online retail sales drop eases in July
Online retail sales rebounded in October, but still recorded the lowest ever growth for that month, according to new research.

With the peak shopping season almost upon us, and winter temperatures finally setting in, retailers were given a much needed boost in October, with online sales growing by +6.2% Year-on-Year (YoY), according to the latest IMRG Capgemini Online Retail Index, which tracks the online sales performance of over 200 retailers.

Though still behind the 5-year average of +10%, October’s results beat the 3-month, 6-month, and 12-month rolling averages (respectively +5.0%, +4.5%, +5.1%). That said, growth for the overall year is currently tracking at less than half that of the previous 12 months (+5% vs. +12%) so the victory may feel a little hollow. It was also the lowest growth for online sales in October ever.

  • Online sales grew by +6.2% Year-on-Year in October
  • The slightly more positive results exceeded the 3-month, 6-month, and 12-month rolling averages (respectively +5.0%, +4.5%, +5.1%)
  • Online only retailers performed particularly well, with sales growth three times that of multichannel retailers (+12.4% vs. +4.3%)
  • Sales through smartphones continued a recent spate of growth – up +50.8% versus last year

Breaking down the results, October’s slightly more positive overall performance was mirrored in a number of categories, including clothing (+5.2%), beer, wine and spirits (+4.8%) and home (+13.6%). Clothing sales, in particular, sprang back from their first negative growth in over two years in September, to record the modest rise. There was also a small glimmer of hope for electrical retailers, who saw their steady plummet in sales slow to -10.5% YoY vs. -15.4% in September.

From a channel perspective, online only retailers had a far stronger month than their multichannel counterparts, with sales growth of +12.4% in comparison to just +4.3%. Meanwhile a rise in M-commerce (+15.2%) highlighted a similar divide in growth between smartphones (+50.8%) and tablets (-8.6%).

Andy Mulcahy, strategy and insight director, IMRG, said: “On the surface of it, online retail sales performance in October showed signs of improvement compared with how it has been doing in recent months. However, there are several signs in the data that the growth was in response to heavy discounting – the overall average basket value was down -21%, for clothing it was down -13%, while for electricals it was also down -21% and the revenue growth for that category was still negative.

The question now is whether this stronger growth is indicative of an improvement in shopper demand, or whether November sales will struggle as a result of volume being pulled forward. This happened in June this year, where sales growth was up +8.5%, the highest of the year, but this was as a result of discounting to stimulate that activity and July growth was the lowest ever for that month as a consequence. Retailers will be hoping that Black Friday falling later in the month, after payday, will help sustain shopper demand – but it seems far from certain.”

Bhavesh Unadkat, principal consultant in retail customer engagement, Capgemini, said: “October results provided a little relief for online growth figures, climbing back above average for the year so far, but it was also the lowest October growth on record, and a third lower than last year. Online only retailers did fare better. However, they also saw a higher differential in basket value suggesting greater discounting could be driving this as we start the slippery slope in the run up to the festive period, where online remains the go-to for deal seekers.

Discounting campaigns are a familiar call to action when retailers are running behind targets to kick start sales activity. However, we have seen that reliance on discounting earlier and earlier in the season dilutes the effect of the flash sale events, such as the adopted, then anticipated, now extended Black Friday Sales. Will this year be a washout as retailers struggle to capture shopper attention amongst a build-up of tactical discounting, or will shoppers release the purse strings as they look to get the most value for their money in an uncertain climate?”

About the ‘IMRG Capgemini e-Retail Sales Index’

The IMRG Capgemini Index, which was started in April 2000, tracks ‘online sales’, which we define as ‘transactions completed fully, including payment, via interactive channels’ from any location, including in-store. 

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