// Online sales fall flat in January following late 2019 surge
// Online sales for the month dipped 0.4% after surprising upturn in November & December
// January’s online sales falls well below the 3, 6 & 12-month averages of 8.9%, 6% & 5.5% respectively
After a surprisingly strong end to 2019, hopes of a continuation of such growth into 2020 were dashed last month when online retail sales dipped 0.4 per cent year-on-year.
According to the latest IMRG Capgemini Online Retail Index, these figures from January indicate potentially troubling times ahead for retail as the otherwise subdued demand from 2019 continues.
Breaking down the results, there were a few positive stories at a category level.
- Retail sales improve in January after weak end to 2019 (ONS)
- Retail sales largely flat in January (BRC-KPMG)
- Retail sales flatline in January (CBI)
After a consistently strong 2019, beauty continued to be one of the best performers in January, although its growth of 7.1 per cent was subdued in comparison to its average of 23.3 per cent last year.
Meanwhile both home and clothing also saw increases of 6.1 per cent and 3.1 per cent respectively.
On the other hand, in perhaps the strongest indication of the Black Friday effect and the impact of end-of-year discounting on the traditional January sales period, electricals sales went from 11.9 per cent growth in December – the sector’s first positive performance in over two years – to a plunge of 17.7 per cent in January.
“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,” IMRG insight director Andy Mulcahy said.
“It’s hard to see why that 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 seven per cent 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.”
Capgemini managing consultant Lucy Gibbs 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?”