Online sales plummet to record low

E-commerce sales declined by 14.1 per cent in June, a record low according to the latest IMRG Capgemini Online Retail Index.

Last month saw the steepest drop in sales in the history of the Index for the second month running.

The figures come as spend continues to be compared to exceptionally high growth in 2020, but the easing of lockdown and the High Street reopening are also contributing factors.

June’s performance dropped well below the three-month (4.54 per cent decline), six-month (26.2 per cent rise) and 12-month (35.5 per cent increase) rolling averages.

After record sales last year, most categories saw negative growth, with health & beauty in particular down a massive 42.8 per cent.

Not all categories were in decline, with the sale of beers and wines up 20.9 per cent, clothing up 18.6 per cent, and garden rising 19.9 per cent.

“Growth rates are confusing at the moment – historically low due to tough Year-on-Year comparators and easing of restrictions, though volumes remain very high – but some metrics are more reliable, such as the overall ABV,” said Andy Mulcahy, strategy and insight director, IMRG. “While there was hardly any increase in ABV between 2019 and 2020, it has shot up across 2021 so far; in June 2021 it was 62 per cent higher than June 2020.”

Mulcahy added: “There are multiple possible causes, but the main one appears to be that retailers in some categories are finding they are less reliant on discounting to drive sales at the moment; with such high demand running down stock and ongoing issues around supply, shoppers are far more likely to buy an item when they see it in stock, rather than shop around for a better price. This is not true of all categories however, with beauty being a notable exception.”

Chris Long, director of retail consulting at Capgemini, said that the steep fall in is a strong indication that consumer confidence is growing to get back out on the High Street as lockdown eases and the vaccine rollout continues.

“We can expect this shift in spend between online and the high-street to continue, with retailers grappling demand swings and stock challenges across channels to ensure availability for consumers as their shopping habits change,” said Long. “Looking ahead it’s going to be interesting to see how the 19th July ‘Freedom Day’ impacts online spend, although most restrictions will be eased for the high-street there is a potential for an increase in self-isolation numbers from track & trace, which could slow the decline in online demand as many rely on home delivery.”

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