Online retail fails to receive late summer bump as sales continue downward trend

After online sales slumped to their lowest ever July growth last month, retailers saw little reprieve in August with growth of just +3% year-on-year (YoY), according to the latest IMRG Capgemini eRetail Sales Index, which tracks the online sales performance of over 200 retailers. Though typical for sales to slow at the end of summer, August’s result falls well below the 5-year average of +9.6%, as well as the 3-month, 6-month, and 12-month rolling averages (respectively +5.3%, +3.8%, +5.7%).

Looking at the results on a category level, clothing was one of the few bright spots for retailers, with sales up +9.1% against last year. Menswear had a particularly strong month, with sales hurtling up by +21.9%, while footwear sales also grew by +7.3%.

Unfortunately, the picture was not so positive for most categories. Both electricals and gifts continued their extended runs of negative growth (recording results of -22.5% and -30.3% this month), which started at the beginning of the year for electricals, and as far back as last September for gifts. Meanwhile, despite the late summer sunshine and Bank Holiday weekend, BWS and home & garden were also both down by -6.9%.

Andy Mulcahy, strategy and insight director, IMRG, said: “Growth for online sales in 2019 has been well below expectation this year, but there was some hope that it would balance out as 2018 was a year of two distinct halves – the first half was very strong, the second half far less so. It was as we entered the third-quarter last year that growth started to fall away, so this should be the point at which growth rates edge up again as they are against lower rates from last year. That has not happened.

“It’s not universal bad news – some categories are doing quite well still, but in general retailers are having to work hard to drive sales activity; the average spend is down by around one-third, quite likely due to discounting, and the higher-spend categories of electricals and home & garden are both in negative territory. It’s difficult to see anything terribly positive on the horizon as we move toward the crucial peak trading period; it could be a very tough one this year.”

Bhavesh Unadkat, principal consultant in retail customer engagement, Capgemini, said: “August was yet another disappointing month for online sales with low growth rates as we head into the peak trading period. Conversely, mobile sales have shown stronger performance over the last few months. During 2018 the pace of growth had been stalling, however throughout 2019 there has been renewed growth, with mobile sales +14% in August versus last year, higher than the 3- and 6-month monthly averages which were +9% and +8% respectively. This is particularly noticeable in smartphones, reporting +36% growth versus last August, and showing a rise in results since the beginning of the year. Retailers are focusing more than ever on their mobile customer experience, combined with increases in app advertising and more secure payment options, demonstrating that there is still room for growth in market share by optimising the channel strategy.”