Online retail sales growth slows again in January

Online retail recorded its worst January sales growth (+7% YoY) in three years last month. The industry?s poor recent sales performance continued into the New Year.

This is according to the IMRG Capgemini eRetail Sales Index. The month provided little relief to retailers on the back of December?s all-time low sales growth. It recorded a little over half the growth figure achieved during January last year (+13.9%).

January growth was above the 3-month average of +6.3% (YoY), but that was due to December?s record-low performance.

When looking at the 6- and 12- month averages, January fell below the growth rates of +7.9% and +11.2%.

Health and beauty is resisting the struggles of the index, enjoying a +8.1% (YoY) growth in January.

It was a bleaker month for gifts and electricals, which recorded -25.8% and -19.1%.

Tough year for online retail

Andy Mulcahy, strategy and insight director, IMRG, said: ?2019 could well prove to be a very hard year. The January growth was a slight improvement on the recent difficult trading conditions.

?The discounting that has been rife since 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 into February, many sites have either switched off discounting or reduced 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. 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, Capgemini: ?January growth was half of last year. It’s below the 5 year average for the month. It has failed to recover sales from the poor performance in December 2018.

?One area where we are seeing a big impact is electricals with continued YoY declines. This often relates to the confidence index. Coupled with decreasing basket values there is an sign that customers continue to hold back on spending. Especially in the more luxurious and higher ticket categories.?

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