Online sales grew by 36% in 2020 – the highest growth seen for 13 years, according to etail association IMRG. Thanks to the unexpected onset of Covid-19, ecommerce beat IMRG’s prediction for 2020 of 7.8% at the start of the year. This year, the IMRG-Capgemini Online Retail Index, is stepping back from predictions, and says the outlook is too uncertain.
Andy Mulcahy, strategy and insight director at IMRG, says: “At the start of each year we usually provide a forecast for online sales growth for the coming year. In 2020 things changed rapidly, and it makes predicting 2021 extremely difficult. We could end up with a year where significant pandemic disruption lasts for the first quarter, the first half, or most of the year; shopper spend might divert strongly to experiences and holidays if things open up again; the economic situation might lead to a squeeze on spend; the list of potential macro variables goes on.
“As it is so uncertain, some datasets are going to look odd this year and we think putting a forecast out would not be useful. This might be a year where we have to adjust our understanding of what good looks like. For example: while growth in Q1 will probably look similar to previous lockdown rates, from April in 2020 those rates were extremely high and will be hard to build upon. If a category was up +120% one month in 2020, recording a drop of -20% for that same month in 2021 might actually be considered a reasonable result.”
In December alone, online sales grew by 37%, as measured by the index, which tracks the performance of more than 200 retailers. Sales were strong in categories from electricals (+116%) to gardening (+165%), but weaker in categories including clothing (+3.2%) and footwear (-5%). Over the full year, sales followed a similar pattern in electricals (+90.8%) and garden sales (+222.5%), as well as for clothing (+1.3%) and footwear (-10.8%).
Over the full year, multichannel retailers (+57%) fared better than pureplay (9.1%) over the full year, and mobile commerce grew by 73%. In December alone, multichannel sales grew by 52.4% and pureplay sales fell by 11.4%.
Lucy Gibbs, managing consultant, retail insight, at Capgemini says: “Retail in 2020 has been fundamentally shaped by the pandemic, which caused disruption to consumer demand norms and a shift in focus to digital channels; reflected in the strongest online Year-onYear growth in 13 years. December sales closed the year with continued double digit growth, up +37%, amid mixed lockdown tiers across the UK. Throughout the year, multichannel retailers have driven a large amount of this growth due to the transfer of demand to online, up +57%. Interestingly, pure online retailers ended the year at +9.1% for 2020, compared to 9.8% last year, though the story remains split by the sector demand shift away from clothing and increasing in electricals, home and garden. We have also seen smaller retailers outperform the larger ones, perhaps due to the ability to be more agile in response to the changes.
“Learnings from 2020 will be crucial as we navigate the uncertainties this year and a sense of a new baseline will take a while to be established. Retailers best set to ride out the storm are those with a strong online presence and the ability to remain nimble, using demand sensing to react to the changing landscape and adapt to surges both instore and online, combined with a readiness to take on opportunities as they come in 2021.”
Speaking at an IMRG online event today, David Kohn customer and ecommerce director at Heals, says the furniture retailer has not seen any signs of online sales slowing down after a very strong year - but is looking forward to its stores being able to reopen. “Virtual consultations, live chat on websites to connect to people in store is very helpful not only for driving online conversation but also telesales, but we do need them to reopen,” he says. “Although online is doing extremely well we really do need both channels in operation. We keep trying to be pessimistic, but the facts keep driving optimism and there is no sign of trade deteriorating thus far.”
Meanwhile, says Alex Timlin, head of client success at Emarsys, its surveys show that shoppers do want to buy in stores but just do not have the opportunity. “We’re not going to see stores go away,” he says.