According to the IMRG Online Retail Index, online sales in the UK remained weak in January, with a decline of 2.2% compared to the previous year. Although this drop is smaller than the 22.5% decline seen in January 2022 due to pandemic restrictions easing, it adds to a string of disappointing reports for online retail. The index, which monitors online sales for 200 retailers, also revealed a significant 28.7% decline compared to December.
The decline in online sales can be attributed to the resurgence of physical shopping as consumers return to brick-and-mortar stores. This shift in consumer behavior has had a negative impact on the online retail sector. Additionally, there has been a decrease in traffic to e-commerce sites. IMRG reported a 5.2% decrease in traffic to online retail sites compared to the previous year, following a 7.7% fall in January 2022. Even when consumers visit online stores, converting them into customers has proven challenging.
The average conversion rate for total sessions in January remained relatively steady at around 3.2%, but it was significantly lower than the 4.1% conversion rate seen in January 2021. This decline suggests that shoppers are more hesitant to make online purchases.
The impact of inflation is also evident in the January figures, with the average basket value increasing from £113 in January 2022 to £130 in January 2023. This indicates that consumers are spending more per transaction, likely due to the rising prices of goods and services.
In terms of specific categories, gift sales have continued to be weak, experiencing a 16.1% decline in January 2023 compared to the previous year. The online clothing category also saw a 4.5% decline in revenue, signaling a lack of confidence among retailers in this sector. However, there was a positive growth subcategory within clothing: footwear. IMRG’s index showed a 4.7% increase in sales for footwear, highlighting its resilience in the online market.
Andy Mulcahy, strategy and insight director at IMRG, believes that improving shopper confidence is crucial to boosting online sales. He suggests that as the economic situation improves, people will feel more secure in their financial circumstances, leading to increased spending on discretionary items. However, based on the results from January, Mulcahy believes that it may still take some time before this improvement takes place.
Overall, the weak online sales in the UK in January underscore the ongoing challenges that e-commerce faces post-pandemic. While physical retail has shown signs of recovery, online retailers must find ways to enhance consumer confidence and improve conversion rates in order to remain competitive in the evolving retail landscape.
Useful links:
1. IMRG
2. Office for National Statistics – Retail Sales
