The UK online retail sector faced challenges in May as it struggled to meet expectations set during the pandemic-fueled boom and the immediate post-pandemic period. However, the fashion category proved to be an exception and showed strength, described as a category “making up for lost time.” According to the latest IMRG Capgemini Online Retail Index, which tracks the online sales performance of over 200 retailers, overall sales declined, but there were some surprising results.
While discounters and luxury retailers saw a decline in sales, the fashion category performed well. Budget retailer sales experienced a significant 15% plunge in May, luxury retailers were down by 3.6%, and mid-market retailers saw a modest increase of 0.5%. E-tail sales as a whole experienced an 8.7% year-on-year decline, and month-on-month sales also decreased by 0.6% compared to April.
Despite the overall decline, there were a few positive indicators. The Average Basket Value (ABV) set a new record high of £151, increasing by £6 from April’s previous peak. This suggests that customers may be placing larger orders to avoid repeat delivery fees or opting for higher-quality items to minimize the need for future purchases. Website traffic also increased by 8% compared to the previous year, indicating a growing number of people shopping online. However, retailers reported longer purchase cycles as consumers spend more time considering their options.
The index revealed that trading conditions remained challenging, particularly during the first week of May, with a 10.9% decline compared to the previous year. However, spending improved throughout the month, and by week three, the decline was only 0.3%. The report speculated that this improvement could be attributed to the Jubilee celebration, with people purchasing patriotic clothing and other items ahead of the bank holiday. Clothing sales experienced a strong 14% increase, divided into an 18% rise for womenswear and a 12% increase for menswear. On the other hand, health and beauty products saw a significant 28% decline, possibly indicating a shift in spending towards physical stores.
Andy Mulcahy, Strategy and Insight Director at IMRG, acknowledged that May’s online retail performance was quite poor. The economic situation is significantly impacting demand, and April’s results hinted at stagnant growth. However, Mulcahy emphasized the positive performance in the clothing category, where growth was strong compared to May 2021. He believes that the increasing number of people shopping online and the general sentiment among the UK public that the pandemic is over and they can freely go out again are contributing factors to the growth in the fashion category.
Useful links:
1. UK online fashion retail booms as overall market declines in May
2. UK online sales suffer decline despite strong fashion growth
