The UK e-tail industry experienced yet another decline in August, extending the 17th consecutive month of year-on-year drops. The IMRG Capgemini Online Retail Index reported that online retail sales in the UK fell by 4.1% compared to the same period last year, erasing the positive progress seen in July. Additionally, month-on-month sales were down 6.2% compared to July, surpassing the typical decline of 2% for this time of year. Year-to-date sales have also plummeted by 14%, painting a gloomy outlook for the rest of the year.
Amidst the overall decline, there was a silver lining for the clothing category, which displayed positive year-on-year growth of 2.8%. This makes it the only category to experience growth during this period. However, garden-related goods saw a sharp decline of 24.5%, while the beers, wines, and spirits category also experienced a significant drop of 20.6%, marking the steepest declines for the month of August.
The growth in clothing sales in July (+11.9%), particularly in womenswear (+20%), was largely attributed to England’s triumph in the UEFA Women’s Euro 2022 tournament. However, the growth rate slowed down in August, with the clothing category only showing a modest increase of 2.8%, and womenswear up by 7.6%. This slowdown could be attributed to the impact of the overall cost-of-living crisis, which has made fashion shoppers more cautious in their spending.
Andy Mulcahy, the Strategy and Insight Director at IMRG, expressed concern over the challenging summer for online retail and the upcoming peak trading period. Mulcahy expressed hope that the recent energy cap announcement would boost shopper confidence in the months ahead. However, he also highlighted that the decline in online sales during July and August is atypical. To have a positive performance during the upcoming Black Friday and peak period, retailers will need to generate significant sales growth.
In conclusion, while the overall state of online retail sales in the UK remains in decline, the clothing category has remained resilient with positive year-on-year growth. However, the challenging economic conditions and cost-of-living crisis have significantly impacted consumer behavior, leading to more cautious spending habits. As retailers gear up for the peak trading period, they will need to develop effective strategies to generate substantial sales growth and recover from the current slump.
Useful Links:
1. BBC News: UK online retail sales suffer another YoY decline in August
2. Capgemini: UK online retail sales reverse positive progress in July
