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Ecommerce sees record declines in December – and 2022: IMRG

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UK ecommerce fell by a record 10.5% in value in 2022, compared to 2021, new retail sales figures suggest. That’s the first year of full-year decline recorded by the IMRG Online Retail Index, following a previous low of 2.7% growth in 2021, compared to 2020. And in December 2022, online sales fell by a still sharper 12%, according to the index, which tracks the online sales of 200 retailers. That’s below the longer-term average over three months, (-5%), six months (-4%) and 12 months (-10%).

Growth was flat in Black Friday week, and the following week (w/c November 27) sales fell by 7.3% year-on-year (YOY). In the same week in 2021, sales had fallen by a third (-34%) against 2020, when non-essential retail stores were closed in lockdowns. Business was also particularly slow in the week of December 18 (-4.7%) following delivery disruptions that led retailers to bring forward their final Christmas order dates. That week’s decline came one year on from a 22.4% YOY decline on 2020.

Andy Mulcahy, strategy and insight director at IMRG, says: “Retail is a confidence game; if people feel they are comfortable with their financial and have some disposable income to play with every month, then retailers tend to see that reflected in general patterns of demand. Mid-2022, we revised our forecast range, making a decline of -10% the lowest estimate in our modelling, which is where 2023 came in. So, it really has been a poor year. The bright spot, however, is that traffic to retail sites has continued to grow even after the huge surges from the pandemic, so once the general economic malaise eases, retailers should be in a good place to benefit from the fact that people still like browsing and shopping for products. The issue is that many are expecting another tough year in 2023, with the first half, in particular, unlikely to provide much respite.”

The only categories that saw growth in December were in the lingerie (+0.9% YoY), haircare (+9.1% YoY), and makeup (8.3% YoY) sub categories. However their parent categories still saw sales fall – clothing (-6.1% YoY) and health & beauty (-11.8% YoY) – into positive territory. Clothing was the single main category to achieve positive growth for 2022 as a whole, at +2.5% YoY, with electricals (-18.1% YoY) and home & garden (-17.6% YoY) seeing significant declines.

Rising inflation meant that the average basket value increased from £121 in 2021 to £134 in 2022, making products more expensive for people to buy. The conversion rate from visits to purchases was at times in 20% lower in 2022 than at the same times in 2021.

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