The UK e-commerce industry experienced a significant decline in January, with online revenue falling by 7% compared to the previous year. This drop adds to the 3.5% decrease recorded in the previous year, making it a “very slow” start for online sales according to the IMRG Online Retail Index. While this decline is not the worst recorded, with February 2022 seeing a 29.6% drop due to the e-commerce boom during lockdowns, IMRG highlights that demand felt weak in January.
Since the peak of the pandemic, e-commerce revenue has been on a decline, with a 10% decrease in 2022 and a 3% decrease in 2023. IMRG predicts stagnant sales for this year, as growth rates in January were significantly lower compared to the previous year, with substantial declines observed.
Even the typically strong payday week saw a decline of 9.4% in January, compared to an 11.1% drop during the same week in 2023. The 7% drop for January marks the second-worst performance since the distorted comparison period in early 2022, with only December 2022, impacted by Royal Mail strikes, showing lower figures.
Clothing was one category that experienced poor online growth in January, falling by 10.8%, surpassing the overall decline in the e-commerce market. However, garden products saw an unexpected increase of 9.2%, possibly due to mild temperatures. Health and beauty also saw growth of 9.1%, being the exception and not experiencing any negative growth for an entire month since June 2023.
Andy Mulcahy, Strategy and Insight Director at IMRG, commented on the current state of e-commerce, stating that the economic situation is dire and demand has been impacted. He highlights that e-commerce is no longer immune to tough times and is equally vulnerable as the retail industry and other customer-facing sectors. However, he sees a potential bright spot on the horizon with the advancement of technology. Mulcahy believes that as AI becomes more embedded in platforms and systems, the personalization it enables may restore growth to e-commerce.
Overall, the decline in UK e-commerce in January reflects the challenging economic environment and weakened consumer demand. While certain categories like health and beauty have managed to maintain positive growth, the industry as a whole faces difficult times. The potential for growth lies in leveraging technological advancements, particularly AI, to enhance the online shopping experience and provide personalized solutions for consumers. Given the uncertainty in the macro environment, stability alone cannot be relied upon to drive growth in e-commerce.
Relevant Links:
1. BBC: UK E-commerce sees decline in January
2. IMRG Official Website
