E-commerce sales in the UK have experienced a decline in comparison to the previous year, with the clothing sector being particularly affected. Based on the latest IMRG Capgemini Online Retail Index, online sales dropped by 3.4% in October when compared to the same month in the previous year. This decline follows a 7.3% drop in October 2021. However, there was a growth of 11.7% when compared to the previous month, which aligns with the usual trend seen during the festive shopping season.
What makes this situation interesting is that despite a 2.1% increase in website traffic to online retail sites compared to the previous year, the conversion rate of online visitors into customers was 20% lower than in 2021. This highlights the challenges faced by online retailers, who experienced a surge in business during the pandemic as customers were compelled to shop online. However, British consumers have returned to physical stores with more enthusiasm than expected, and coupled with the current cost-of-living crisis, this has had an impact on the e-commerce sector. Companies like Boohoo have encountered significant challenges, while others, like Made.com, have even gone into administration.
Typically, the transition from summer to autumn witnesses an increase in consumer spending as individuals begin preparing for Christmas early. In October, every category except garden experienced positive monthly growth. Furniture emerged as the standout category with a 2.9% increase compared to the previous year. However, premium brands within the industry experienced slower growth, indicating that consumers are taking a more cost-conscious approach to spending. Clothing, which had consistently positive sales throughout the year, saw flat growth last month. The health and beauty category witnessed a significant yearly decline of 7.2%.
Andy Mulcahy, the Strategy and Insight Director at IMRG, shed light on the challenging trading environment, particularly within the gifts category. This specific category saw declines of 20% or more in certain weeks, following a 30% drop during the same weeks of 2021. The reduction in spending, especially on gifts, does not bode well for the upcoming Christmas season. Mulcahy also emphasized that the timing of the Chancellor’s autumn statement, which is anticipated to include tax increases, may further hamper shopper confidence, especially during the week of Black Friday.
To conclude, the e-commerce sales in the UK have observed a decline compared to the previous year, with the clothing sector experiencing stagnant growth. The challenges faced by online retailers, the return of consumers to physical stores, and the cost-of-living crisis have collectively contributed to this trend. Additionally, the timing of the autumn statement and potential tax rises could further negatively impact shopper confidence, particularly during the crucial week of Black Friday.
Useful links:
1. https://www.bbc.co.uk/news/business-59135957
2. https://www.ft.com/content/302751f8-9c4c-4aa7-8c24-d4ec5accf8d5
