January online sales grew by 7%, year-on-year, according to the IMRG Capgemini eRetail Sales Index for the month. That contrasts with last January, when sales had grown by 13.9%, and is the slowest rate of growth seen in the month for three years.
This year, however, they represent a slight upturn, since growth was ahead of December’s year-on-year (YOY) growth of 3.6%. Looking to the longer-term trend, the figure is ahead of the 6.3% growth posted over the last three months, but behind both the six month (+7.9%) and 12-month (+11.2%) averages.
Andy Mulcahy, strategy and insight director at IMRG, said: “2019 could well prove to be a very challenging year, and the January growth was a slight improvement on the recent difficult trading conditions.
“The discounting that has been rife since all the way back in July continued into January as expected due to post-Christmas clearance. The challenge for retailers now is how to ease off the reliance on discounting for driving sales. As we’ve moved in February, many sites have either switched off discounting or lessened the prominence of such offers. It’s now a matter of holding nerve, but the positive thing for clothing retailers is the weather. It has been very mind and sunny for this time of year, so that may help to stimulate activity on spring ranges that isn’t linked to discounting; you should never underestimate the potential impact of the British weather on retail.”
Bhavesh Unadkat, principal consultant in retail customer engagement at Capgemini, said: “January growth was half that of last year and below the five year average for the month, failing to recuperate sales from the poor performance in December 2018.
“The cautious start to the year is unsurprising given that pressures on the retail sector remain high as a result of further store closure announcements, continued low consumer confidence and economic uncertainty as we hold our breath, and our spending, ahead of further news on how the UK will exit the EU.”
In January, the health and beauty category (+8.1% YOY) enjoyed ecommerce sales growth, but gifts (-25.8%) and electricals (-19.1%) both saw sales fall.
“One area where we are seeing a big impact is electricals, with continued year-on-year declines, often correlated to the confidence index, coupled with decreasing basket values,” said Unadkat. “There is an indication that customers continue to hold back on spending, especially in the more luxurious and higher ticket categories.”
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