No signs of early Christmas spend as online sales continue to underperform in October
Despite expectations that an early start to festive spend might herald a return to growth in October, online retail sales have continued to remain low, falling by -11.2% Year-on-Year (YoY). This is according to the latest IMRG Capgemini Online Retail Index, which tracks the online sales performance of over 200 retailers. While the Month-on-Month (MoM) surge of +11.2% proved the highest since the high streets reopened in April, this performance falls in line with pre-pandemic patterns for this time of year.
Last month’s slowdown in online sales was once again kicked off by a poor first week, down -12.5% compared to only -0.9% during the last week. While the average basket value (ABV) remains high at £131 (though down from its August peak of £149), the conversion rate has fallen further (+2.9% in Oct 2021 vs +4.1% in Oct 2020), suggesting ongoing issues with stock levels, due to the pressure on the supply chain.
At a category level, beers, wines and spirits retailers are still seeing positive growth, but only just – up +2.2% compared to last month’s figures of +18.6%. The only other category to record growth was clothing – up +7.5%. Elsewhere, for only the second time since December 2019, garden sales have declined (-7.5%), while health and beauty remains the worst hit category at -23.3% growth.
Lucy Gibbs, managing consultant – retail lead for analytics & AI, Capgemini: “October online spending was more subdued than expected this year. Stock shortages and supply chain disruptions gave speculation that customers might start shopping earlier than usual, however this may also be having a negative effect; Conversion is down across the board compared to the last two years 2.9% compared to 4.1% in 2020, with stock outs and lack of stock depth contributing to customers leaving the funnel.
Consumer confidence has also dropped for a third month in a row as financial concerns build due to increasing inflation and interest rates and climbing covid rates, providing a cautious backdrop ahead of the peak season this year. Campaigns for black Friday are ready and waiting, however will these be enough to draw the share of wallet this season?”
Andy Mulcahy, strategy and insight director, IMRG: “The potential for Christmas shopping to get underway early this year did not really materialise in October, but it is evident that retailers are certainly trying to get it moving in early November. Of the 317 retailers IMRG is tracking every day, 25 had their Black Friday campaigns live on Wednesday 3 November versus only 14 on the same day in 2021. In terms of sales performance, it seems to be a mix at the moment, and this may be what characterises peak trading as some are better positioned with their stock levels than others. A poll IMRG ran of 50 retailers on 4 November found that half were seeing activity on their sites ‘below expectation’, while it was ‘above expectation’ for around a quarter. There could end up being quite a sharp divide between who does well and who does not this festive period.”