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Online sales grew at their slowest in May for almost two years: IMRG

Online sales grew at their slowest rate in almost two years, rising by 10.2% in May, according to figures from the IMRG [IRDX VIMR] out today. The IMRG Capgemini e-Retail Sales Index suggested that overall sales growth was at its lowest since October 2015, and that clothing sales growth of 7.6% represented a record low for the month. This, it said, was probably down to rising inflation and uncertainty surrounding last month’s general election.

Other online categories to see sales grow more slowly included the gifts sector (+5.5%) – the lowest rate for May since 2009, and electricals, where sales were 8.6% lower than a year ago. This, said IMRG, was the only negative year-on-year change seen for the sector since its records began in 2003.

Andy Mulcahy, editor, IMRG, said: “Shopper confidence tends to take a hit just before an election so, while the fact we were actually having a general election may have been a surprise, a drop in online retail sales growth preceding it is not. Growth usually rises again soon afterwards – even in July 2016, the month after the Brexit vote and all the uncertainty that came with it, sales were up +18.6%. The issue this time is that we now have a hung parliament, which leaves all political options still available, including the potential for yet another general election in the near future. 2017 is certainly turning out to be a very challenging year for retailers to navigate.”

IMRG said rising costs may also have an impact, with the latest ONS data showing that inflation, as measured by the consumer prices index (CPI) grew to 2.9% in May. This is likely to be fuelled in part by retailers passing on the higher costs of buying in products to shoppers.

Sales growth through tablet devices also recorded a record low in May – down by 4.9% year-on-year, and the lowest rate since IMRG and Capgemini started tracking this metric in 2013. Sales appear to have shifted t smartphones, where sales growth was up by 46.2%.

Bhavesh Unadkat, principal consultant in retail customer engagement design at Capgemini, said: “As spending warms up with the start of summer, May and June are usually two of the strongest months of the year. With ongoing economic and political uncertainty however, this month’s results show a clear reversal of that trend. Clothing growing at 8% on the year is the lowest growth we have seen for May. Menswear and electricals are both down on the year and showing the second lowest and lowest performance since we started recording the sectors respectively. Health and beauty has fallen by 2% year-on-year and -13% month-on-month. Month-on-month growth was the lowest on record. Retailers need to focus on maintaining and even gaining market share as consumer spending stabilises.”

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