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Online sales fall flat in January following late 2019 surge

27 Feb 2020

LONDON UK – February 21, 2020: After a surprisingly strong Christmas sales period, retailer hopes of a continuation of such growth into 2020 were dashed in January, with online retail sales growth dropping back to -0.4% Year-on-Year (YoY). That’s according to the latest IMRG Capgemini Online Retail Index, which tracks the online sales performance of over 200 retailers.* In a month where almost 10,000 jobs were reportedly lost within the sector, these figures indicate potentially troubling times ahead for retail over the next twelve months as the otherwise subdued demand from 2019 continues.

Breaking down the results, there were a few positive stories at a category level. After a consistently strong 2019, beauty continued to be one of the best performers in January, though its growth of +7.1% was relatively subdued in comparison to its average growth of +23.3% in 2019. Meanwhile both home and clothing also saw increases of +6.1% and +3.1% respectively.

Unfortunately, that was largely where the positivity ended. 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 plummeted from their first positive performance in over two years in December 2019 (+11.9%) to -17.7% in January.

Andy Mulcahy, strategy and insight director, IMRG: “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. 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 +7% 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.”

Lucy Gibbs, managing consultant – Retail Insight, Capgemini: 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?”


About the ‘IMRG Capgemini Online Retail Index’

The IMRG Capgemini Online Retail 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.

*Please note from January 2020 the Index no longer includes data from the travel sector

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.