Asos’ disappointing figures earlier this week clearly weren’t a blip – UK online retail sales suffered its worst November growth since 2011 last month coming in at just +8.1% year-on-year, as Black Friday discounting failed to rejuvenate consumer spending and relieve the recent struggles for UK retailers, according to the latest IMRG Capgemini e-Retail Sales Index.
November’s figures fell below the three- (+8.3%), six- (+10.5%) and 12-month (+12.2%) sales growth averages, as the market experienced its lowest ever growth for a Black Friday week.
While online retail appeared resilient to the struggles experienced on the high street during the first half of 2018 (when growth was up 16% vs the first half of 2017), it is apparently now being impacted by the tough trading climate.
The Health and Beauty sector was the main beneficiary of Black Friday, achieving an impressive +25.1% growth YoY and an increase of +95.5% from October MoM. However, in contrast gifts were down by -10.3% compared to last year.
Andy Mulcahy, strategy and insight director, IMRG explains: “Black Friday was underwhelming from a revenue perspective this year and there are multiple reasons why shopper spend may not have responded as well as may have been expected. There is economic and political stability potentially impacting shopper confidence, plus the possibility that people might be becoming fatigued with the event – a factor compounded by negative stories released in the run-up, such as those by Which?.
He continues: “One thing that is clear from our research is that heavy discounting had been going on far in advance of Black Friday, which lessens retailers’ capacity for grabbing attention by going into sale. Did the sheer scale of the discount rates suppress revenue? Or is the overall peak spend getting more evenly spread throughout the Christmas build-up this year, due to Black Friday falling so early in November before many people had been paid? It’s a very complicated story this year, but the duration and depth of discounting rates are likely to be very significant.”
Bhavesh Unadkat, principal consultant in retail customer engagement, Capgemini: “Despite high conversion this month where all weeks saw an increase in orders, the drop in average basket value has impacted the sales growth, suggesting that extended promotions have had an impact on revenue this year.
“The evolution of Black Friday has shaken up the Christmas sales landscape over the last decade, however, the discounting snowball effect may be losing momentum as retailers try to regain control and extend the demand across the festive period. We saw a mix of strategies from the retailers; from kick starting offers early in the health and beauty sector, compared to a number of high-profile retailers who made a stand and pulled out of Black Friday altogether to protect their margins and pricing strategy. December performance and end of year profits will be the true measure of who has gained and lost in the discounting game this year.”
The news comes hot on the heels of ecommerce poster-boy Asos revealing weaker than expected sales growth in November, against a backdrop of a weak Black Friday. The fast fashion pureplay retailer said that although its total retail sales grew by 13% in the three months to November 30, with sales up in markets including the UK (£237.1m, +19%), EU (£203.8m, +18%) and US (£85m, +13%), that had fallen “significantly behind” expectations.
“The current backdrop of economic uncertainty across many of our major markets, together with a weakening in consumer confidence has led to the weakest growth in online clothing sales in recent years,” said Asos in its trading statement this week. “We have recalibrated our expectations for the current year accordingly.”