Online sales off to a sluggish start for the year

January online sales
// January online sales up 7% Y-o-Y
// IMRG-Capgemini say this is the slowest growth for January in 3 years
// Also a stark contrast to the 13.9% growth recorded for January last year

Online retail sales growth for the month of January was at its slowest in three years last month, as the sector’s recent poor sales performance continued into the New Year.

According to the latest eRetail Sales Index from IMRG and Capgemini, growth was at seven per cent year-on-year, almost half of the 13.9 per cent growth recorded for the same month last year.

Last month also provided little relief to retailers on the back of December’s all-time low sales growth, although it was still marginally above the three-month average of 6.3 per cent.

However, when looking at the six and 12-month averages, January’s growth of seven per cent fell below the average growth rates of 7.9 per cent and 11.2 per cent respectively.

Health and beauty continues to resist the struggles of the overall index, enjoying a 8.1 per cent year-on-year growth in January.

However, it was a bleaker month for gifts and electricals, where online sales plunged 25.8% per cent and 19.1 per cent respectively.

IMRG insight director Andy Mulcahy said the January figures lend weight to the possibility that 2019 could be a challenging year for online retail.

“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,” he said.

“As we’ve moved into 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 mild 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.”

Capgemini principal consultant Bhavesh Unadkat highlighted how January growth was below the five year average for the month.

“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,” he said.

“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 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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