UK online retail sales were up just 7.5% YOY last month – recording the lowest September growth since 2014, as shoppers are left counting the pennies after summer and hold out for Black Friday deals.
According to the latest IMRG Capgemini e-Retail Sales Index, online sales have faltered since England’s World Cup exit in July and the close of the hot summer. Despite a brief uplift around the August bank holiday, growth online fell to a new low for the year in September.
For the third quarter overall, online retail sales growth was up 10.1%, compared with a 17.1% increase in Q2.
The gift category saw online sales fall by 23% YOY, in its biggest drop since March 2010, suggesting that wallets have tightened after a high-spending Q2. The clothing sector also felt the brunt of the fall in spending, posting a 2.2% uplift, which came in well below the five-year average for September of +7.4%.
Meanwhile, home and garden had a slightly better performance but still recorded month-on-month declines. Sales in the home sector - which includes DIY – were down 6.33% on the previous month, however, sales growth was actually up 5% compared with September 2017.
The gardening sector saw some YOY growth in September, with sales up 3.13% on the previous year but transactions fell by -34% compared to August 2018.
IMRG strategy and insight director Andy Mulcahy: “Following such a strong start to the year for online retail sales, the third-quarter has come in notably lower at only +10.1%, and there are a few factors that may be influencing this.
“The strong second quarter, stimulated by events such as the Royal Wedding, World Cup, and heatwave, may have left people with less disposable income in quarter three. However, beyond that, shopper confidence appears to have fallen at a time when numerous retailers are putting out profit warnings and announcing store closures.
“Meanwhile, several retailers have spoken publicly about the scale of discounting that has been active across various retail sites, meaning that the industry is already heavily involved in discounting before we even get near to Black Friday. The conversion rate was markedly down in September; could it possibly be that people are already browsing for ideas, in the knowledge that Black Friday will inevitably bring heavier discounts?”
The report also charted changes in how consumers are shopping online, with the index for sales via smartphones continuing to grow during September, up 16.1% on last year. However growth has slowed considerably against the +55.8% recorded last year, with the market reaching a greater level of maturity. Sales via tablets continued to plummet, hitting -22.5% YoY compared to +8.1% last year.
Capgemini principal consultant in retail customer engagement Bhavesh Unadkat said of the results: “This month’s performance was the lowest growth seen this year. However, it was building on what was a strong performance in September last year (+13.0%)… Mobile commerce also dropped to a new low of +1.1% in September following significant decline in the last two months. Multi-channel retailers hit a decline of -11.8% vs last year, compared to 8.8% in online only retailers.”