First half online sales growth ‘lowest ever’

Online sales slumped to their lowest ever growth rate of just 5.4 per cent year-on-year, according to IMRG and Capgemini, which track the online sales performance of over 200 retailers with a combined annual spend of £28 billion.

Comparatively, the same time period in 2018 saw results of 16.9 per cent year-on-year, with consumer spending buoyed by events like the Royal wedding, World Cup and the Spring heatwave.

This slowdown in growth was also broadly reflected across the sectors, with all but three recording reduced, but still positive, increases. Health and beauty was up 13 per cent, home and garden rose 9.3 per cent, and clothing saw a 7.3 per cent increase.

Looked at individually, one of the largest declines in growth was seen in garden (down 34.4 per cent year-on-year), although this reflected a fall from a particularly high growth rate during the first half of last year, thanks to the standout weather from April onwards.

Elsewhere, the sectors which fared worst were electricals (down 22.7 per cent year-on-year), gifts (down 22.8 per cent) and lingerie (down 8.9 per cent), all of which have experienced a continuous decline in sales over the past six months.

Andy Mulcahy, strategy and insight director at IMRG, said: “In this country we have a tendency to regard online retail and physical retail as being completely separate; an idea that has been fed over the past few years by the consistent growth in online even as the High Street struggled.

“What we are now seeing is that they are not separate at all, but in fact deeply interconnected – hence growth in the first half of 2019 was the lowest yet recorded.”

Mulcahy suggested that with so much media coverage of well-known retailers announcing profit warnings and store closures, customer confidence in shopping with them is low. “This forces them into heavy discounting to drive sales and their competitors get dragged into it too.”

However, from an online sales growth perspective, it is the multichannel retailers (up 5.2 per cent for January to June 2019) which are currently experiencing lower growth than the online-only retailers (up 7.4 per cent).

Bhavesh Unadkat, principal consultant in retail customer engagement at Capgemini, added: “If this year continues to mirror performance of last year, we can hope for a stronger second half.

“However, with Brexit happening just before peak period and still uncertainty around what it will bring, we cannot know whether the index will recover or growth under 10 per cent will be the new norm, at least for this year.”

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