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IMRG Capgemini eRetail Sales Index: Online retail sales in May suffer worst growth on record

20 Jun 2019

After disappointing weather and no Royal weddings in the social calendar, May continued the discouraging 2019 trend of below-average sales growth, with just +1.9% Year-on-Year (YoY), according to the latest IMRG Capgemini eRetail Sales Index. When compared to this time last year, which saw the strongest May growth for online retail since 2010, the state of online retail remains rather tough.

Further sector analysis in May shows a number of categories struggling significantly. Electricals (-27.5%) and Gifts (-18.5%) continue the downward trend we have seen since last November and September respectively. Surprisingly BWS recorded the first negative growth for the year reaching a staggering -19.7%.

Clothing has had a much slower growth rate vs. last year’s performance (+8.2%): Menswear was down -13.3% against very strong results last year (+23%) and Womenswear (-4.8%) continued the trend of single digit or negative growth this year. Accessories, which has seen successful growth in previous months, has now reported its worst performance in 10 years; down -20.0% YoY. Footwear was the only clothing sector to see positive growth (+6.7%).

However, the Health & Beauty sector continued its a strong monthly performance with +22.6% compared to +2% total vs last year, with the explosion of consumers focusing their attention on health and wellbeing as well as the rise in celebrity beauty endorsements.

Despite last month’s dramatic drop, m-commerce is up in May by +8.4% with Smartphones reaching +35.0% and tablets flat at +0.3% against last year.

 Andy Mulcahy, strategy and insight director, IMRG, said: When tracking the movement of something in an index, you sometimes get results that are a bit skewed by the growth rate you are comparing against. May 2018 was one such month – with the early summer heatwave, Royal Wedding and a World Cup looming, people seemed happy to spend out pretty lavishly on retail, so May 2019 was always going to be anchored by it. That said, 1.9% growth is far lower than we might have expected; indeed, it’s the lowest since we started tracking nearly 20 years ago, so it seems there is something more going on here.

“The fact is that retailers are caught in a perfect storm at the moment – with all the problems on the high street, changing customer behaviour, shopper confidence low due to all the CVAs and negative coverage of major brands, a shifting competitive landscape; and of course even the weather is refusing to provide any relief. It’s proving tough to find any positives in the sales performance at the moment.”

Bhavesh Unadkat, principal consultant in retail customer engagement, Capgemini, said: “The health and beauty sector is a standout category in a tough month, reporting +22% compared to +2 total vs last year. Wellness and wellbeing have become a high focus area amongst consumers. Therefore, at a time when there is limited disposable spend, this could be impacting other categories such as clothing. 

“Over the last few years Health and Beauty brands have responded to the increased demand for natural ingredients and attention on environmental impact through exciting developments in product innovation, marketing and consumer experience.  Digital has also had a big role, responding to raised social awareness and innovation in technology which has paved the way for initiatives for growth in this space, for example Wearables like Mapo and Fitbit are great examples of this as well as the creation of new business models like the face gym and the increased importance of influencer campaigns.  This plays well into the share of online sales; Kantar has reported that online penetration for cosmetics has increased to 21%.

“Therefore, when wallet share is being fought over, adapting to customer needs and what is important to them is key; if other sectors can integrate these principles into their offering to differentiate, diversify, and better engage shoppers there will be a greater chance of them staying ahead of the game.

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About the ‘IMRG Capgemini e-Retail Sales Index’

The IMRG Capgemini Index, which was started in April 2000, tracks ‘online sales’, which we define as ‘transactions completed fully, including payment, via interactive channels’ from any location, including in-store.

About IMRG

For over 20 years, IMRG (Interactive Media in Retail Group) has been the voice of e-retail in the UK. We are a membership community comprising businesses of all sizes – multichannel and pureplay, SME and multinational, and solution providers to industry. We support our members through a range of activities – including market tracking and insight, benchmarking and best practice sharing. Our indexes provide in-depth intelligence on online sales, mobile sales, delivery trends and over 40 additional KPIs. Our goal is to ensure our members have the information and resources they need to succeed in rapidly-evolving markets – both domestically and internationally.

About Capgemini

A global leader in consulting, technology services and digital transformation, Capgemini is at the forefront of innovation to address the entire breadth of clients’ opportunities in the evolving world of cloud, digital and platforms. Building on its strong 50-year heritage and deep industry-specific expertise, Capgemini enables organizations to realize their business ambitions through an array of services from strategy to operations. Capgemini is driven by the conviction that the business value of technology comes from and through people. It is a multicultural company of over 200,000 team members in more than 40 countries. The Group reported 2018 global revenues of EUR 13.2 billion.

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