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Online sales growth dips in May, but spend remains high overall

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With the high street open once more, online retail sales recorded their largest drop in volume ever, with growth dipping by -9.1% Year-on-Year (YoY) in May. That is according to the latest IMRG Capgemini Online Retail Index, which tracks the online sales performance of over 200 retailers. 

When you take away the comparison to May 2020’s very high growth of +61.0%, however, the figures paint a far more positive picture. Measured against May 2019’s pre-pandemic levels, last month’s figures actually represent a +46% increase in sales volume. Meanwhile the Average Basket Volume (ABV) has been rising steadily throughout the year, and now stands at £130.

At a category level, the tide continues to turn on those categories that flourished in 2020 and now face very high YoY comparisons, with electricals (-6.0%), health and beauty (-29.2%) and home and garden (-9.4%) all down in sales growth. After the previous month’s surge (+35.8%), it also appears consumers have had their footwear fix as sales fell back to -7.3%.

On the flip side, although holidays abroad are still in flux, clothing continues to perform well (+13.1%) – perhaps as consumers scramble to cover all eventualities of the unpredictable British weather. Elsewhere, beers and wine also had a strong month, with growth of +7.5%.

The figures come as BRC figures out yesterday suggest that almost 40% of retail sales took place online in May – the first full month in which non-essential UK shops were able to trade.

That’s well below the 61.5% of retail sales that took place online last May, when shops were closed in the first UK Covid-19 lockdown. But it’s also significantly higher than the 31.4% of sales that were online in May 2019 – the year before the pandemic emerged. This suggests that a greater share of retail sales may now taking place online than before Covid-19, even now that shops are able to trade once more – and that shoppers may continue to make a greater proportion of their retail purchases online in the future than before the pandemic.

Andy Mulcahy, strategy and insight director, IMRG says: “While the -9.1% Year-on-Year (YoY) drop is technically the biggest in the 21-year history of the index, it can be misleading as it is compared against a huge growth rate last year. The monthly growth between April and May is more revealing; when comparing the same period in 2019 (i.e., a normal year) there is a 10-percentage point difference this year, which also happened between March and April. So, there is definitely a slowing down in demand, though from a very high base.”

Mulcahy adds: “Things are changing fast: the high street reopened in April, then further easing of restrictions in May brought more spending opportunities. Then, in June, all restrictions may be removed, with people likely to use backed-up holidays in July and August to an even greater extent than normal, so online should be impacted by that. If all goes according to plan there, summer could see this trend of decline in online volume continue.”

Lucy Gibbs, managing consultant – Retail Lead for Analytics & AI, Capgemini comments: “A significant drop in Year-on-Year performance in May is not surprising against last year’s heights of online growth. This was accentuated for multichannel retailers (-13.9%) compared to online only (-1.34%) as hospitality has started to open up this month and consumers returned to the shops. Budget retailers also saw the largest swings, down -12.8%, compared to mid-market (-6.2%) and premium retailers (+0.2%). Consumer confidence has recovered to pre-lockdown levels in May as hospitality venues open up which is good news for retailers, however this, combined with the arrival of warmer weather in June may see online performance against last year continue to swing to the negative for the next month or so.”

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