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Online sales fall slightly in January, in the wake of strong Christmas performance: IMRG

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Online sales fell by 0.4% in January, according to new figures from the IMRG.

The year-on-year fall, seen in the latest IMRG Capgemini Online Retail Index, continues the weak growth seen throughout 2019, suggesting that stronger growth seen last November and December was short-lived. Electricals sales fell from their first positive growth in more than two years in December (+11.9%) to drop by 17.7% in January. This, says IMRG, reflects the Black Friday effect on traditional end-of-year discounting. 

More positive results came last month from the beauty (+7.1%), home (+6.1%) and clothing (+3.1%) categories. And online-only retailers (+7.6%) performed significantly better than their multichannel counterparts (-2.9%). 

January’s figure is well below the long-term trend, as reflected in the online sales growth of the last three (+8/9%), six (+6%) and 12 (+5.5%) months. Last month also saw thousands of job cuts in the industry, with almost 10,000 jobs in shops lost before the end of January, according to the Centre for Retail Research. 

Andy Mulcahy, strategy and insight director at IMRG, said: “2019 was an odd year for online sales in the sense that demand was weak for most of the year – particularly over the summer – but then growth throughout November was very strong and December was better than expected too. It’s hard to see why that kind of kind of peak trading would cap such a poor year, so the question was whether that represented a turnaround in demand – given the greater certainty emerging in the political environment during that period – or an anomaly, probably driven by discounting.

“It seems that we now have our answer. Flat growth to start the year, against a modest growth rate of +7% in January 2019 (which itself was the lowest for January in three years) suggests that it wasn’t just uncertainty over Brexit that was suppressing spend; the real reasons are likely to be multiple and diverse, requiring fundamental appraisals of retailer propositions to ensure they are well set up for success in this fast-changing market.”

Lucy Gibbs, managing consultant for retail insight at Capgemini, said: “A flat January has fallen below expectations after the brighter festive period at the end of last year, despite consumers reporting feeling more upbeat about the UK economic prospects.

“Interestingly, budget retailers were seeing more favourable results and outperformed the mid-market players in the clothing and health and beauty sectors, which had positive results this month.  For clothing this has been an increasing divide over the second half of 2019.  Consumers are remaining cautious as we start the year and are seeking value for money. Combine this with a rise in demand for sustainable shopping, will the gradual increase in consumer confidence be reflected in spending patterns as the year goes on?”

From January 2020, the IMRG Capgemini Online Retail Index, which tracks the online sales made by more than 200 retailers via the internet, both online and in-store, no longer includes data from the travel sector.

Image: Adobe Stock

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