Online retail sales in May suffer worst growth on record

20-Jun-2019

  • Online retail sales were up just +1.9% in May 2019 – the worst recorded growth since the e-Retail Sales Index started
  • Monthly growth continues below the 3-month, 6-month, and 12-month rolling average (respectively +2.2%, +8.2%, +7.5%)
  • Clothing keeps growing, although still at a slower rate vs. last year’s performance (+8.2%)
  • Health & beauty sector continued its strong 2019 performance in May, with growth at +22.6% YoY
After disappointing weather and no Royal weddings in the social calendar, May continued the discouraging 2019 trend of below-average sales growth, with just +1.9% year-on-year (YoY), according to the latest IMRG Capgemini eRetail Sales Index. When compared to this time last year, which saw the strongest May growth for online retail since 2010, the state of online retail remains rather tough.
 
Further sector analysis in May shows a number of categories struggling significantly. Electricals (-27.5%) and gifts (-18.5%) continue the downward trend we have seen since last November and September respectively. Surprisingly, BWS recorded the first negative growth for the year, reaching a staggering -19.7%.
 
Clothing has had a much slower growth rate vs. last year’s performance (+8.2%): Menswear was down -13.3% against very strong results last year (+23%) and womenswear (-4.8%) continued the trend of single-digit or negative growth this year. Accessories, which has seen successful growth in previous months, has now reported its worst performance in 10 years: down -20.0% YoY. Footwear was the only clothing subsector to see positive growth (+6.7%).
 
However, the health & beauty sector continued its strong monthly performance with +22.6% compared to +2% total vs last year, with the explosion of consumers focussing their attention on health and wellbeing as well as the rise in celebrity beauty endorsements.
 
Despite last month’s dramatic drop, m-commerce is up in May by +8.4%, with smartphones reaching +35.0% and tablets flat at +0.3% against last year.
 
Andy Mulcahy, strategy and insight director, IMRG, said: “When tracking the movement of something in an index, you sometimes get results that are a bit skewed by the growth rate you are comparing against. May 2018 was one such month – with the early summer heatwave, Royal wedding and a World Cup looming, people seemed happy to spend pretty lavishly on retail, so May 2019 was always going to be anchored by it. That said, 1.9% growth is far lower than we might have expected; indeed, it’s the lowest since we started tracking nearly 20 years ago, so it seems there is something more going on here.
 
The fact is that retailers are caught in a perfect storm at the moment – with all the problems on the high street, changing customer behaviour, shopper confidence low due to all the CVAs and negative coverage of major brands, a shifting competitive landscape, and, of course, even the weather is refusing to provide any relief. It’s proving tough to find any positives in the sales performance at the moment.”
 
Bhavesh Unadkat, principal consultant in retail customer engagement, Capgemini, said: “The health & beauty sector is a standout category in a tough month, reporting +22% compared to +2 total vs last year. Wellness and wellbeing have become a high focus area amongst consumers. Therefore, at a time when there is limited disposable spend, this could be impacting other categories such as clothing.  
 
Over the last few years, health & beauty brands have responded to the increased demand for natural ingredients and attention on environmental impact through exciting developments in product innovation, marketing, and consumer experience. Digital has also had a big role, responding to raised social awareness and innovation in technology which has paved the way for initiatives for growth in this space. Wearables like Mapo and Fitbit are great examples of this, as well as the creation of new business models like the face gym and the increased importance of influencer campaigns. This plays well into the share of online sales; Kantar has reported that online penetration for cosmetics has increased to 21%.