- 25 January 2019
- Transport / Logistics Services
UK online sales figures for December are out, and they aren’t too rosy according to the Cap Gemini IMRG eRetail Sales Index. Year on year growth slowed to just 3.6% in December.
The first half of 2018 was very good however, with online retailers seeing an average 16% year on year growth. This fell away to just 8.4% in the second half.
The year as a whole was better than IMRG and Cap Gemini predicted in 2017 – instead of a 9% overall growth 2018 saw 11.8% thanks to various feel good factors such as the Royal Wedding and World Cup.
December damaged the year’s overall figures. Growth of just 3.6% that month was significantly lower than moths before. According to IMRG, “falling below the final quarter (+6.8%), second half (+8.4%) and 12 month (+11.8%) averages respectively.”
Andy Mulcahy, Strategy and Insight Director, IMRG: “The first half of 2018 was actually very strong for online retailers – it resisted and arguably benefitted from the tough climate that impacted trade for store retail. It is only the second half of the year where the suppressed confidence and spend, evident in so many other sectors, has spread to online retail; the macro-economic situation must be exerting pressure here, particularly with Brexit now entering its crunch period in Q1 2019.
“If there had not been so much uncertainty and shopper confidence had not been so negatively impacted toward the end of the year, it seems a reasonable bet that online retail sales growth could have been much stronger than 11.8% for 2018. If Brexit can be resolved so that a course, whatever that may be, is agreed and pursued, it may help to build shopper confidence again with online likely to be the main beneficiary from a retail perspective.
Bhavesh Unadkat, Principal Consultant in Retail Customer Engagement, Capgemini: “A sharp drop in online retail spending in December brings the rollercoaster of a year to a close, with the industry unable to recover performance in the vital festive period following a disappointing November.
“There is a clear correlation between consumer confidence and consumer spending throughout the year. Conversion rates were actually high in December despite the poor performance, however the lower order value indicates that consumers were tightening the purse strings by taking advantage of promotions rather than purchasing more. This allowed discounters to take the share in the final month of the year. Retailers will need to think carefully on how to manage pricing strategies to protect share of the wallet in potentially quite uncertain times, and the evolution of the peak events will undoubtably be a focus of next year.”