Essential reading for retailers and suppliers in the home improvement market

Online retail slumps in August

Published: 24 September 2019 - Fiona Garcia
 

Internet sales continued on a downward trend last month, failing to receive a boost from the late summer sunshine and Bank Holiday weekend, with transactions in home and garden reportedly down by 6.9%.

After online sales slumped to their lowest-ever July growth last month, retailers saw little reprieve in August with year-on-year (YOY) growth of just 3%. This is according to the latest IMRG Capgemini eRetail Sales Index, which tracks the online sales performance of over 200 retailers. Although it is typical for sales to slow at the end of summer, August’s result falls well below the five-year average of +9.6%, as well as the three-month, six-month, and 12-month rolling averages (respectively +5.3%, +3.8%, +5.7%).

Looking at the results on a category level, clothing was one of the few bright spots for retailers, with sales up 9.1% against last year. Menswear had a particularly strong month, with sales hurtling up by 21.9%, while footwear sales also grew by 7.3%.

Unfortunately, the picture was not so positive for most categories. Both electricals and gifts continued their extended runs of negative growth (recording results of -22.5% and -30.3% this month), which started at the beginning of the year for electricals, and as far back as last September for gifts. Meanwhile, home and garden was also down by nearly 7%.

IMRG strategy and insight director Andy Mulcahy said: “Growth for online sales in 2019 has been well below expectation this year, but there was some hope that it would balance out as 2018 was a year of two distinct halves – the first half was very strong, the second half far less so. It was as we entered the third-quarter last year that growth started to fall away, so this should be the point at which growth rates edge up again as they are against lower rates from last year. That has not happened.

“It’s not universal bad news – some categories are doing quite well still, but in general retailers are having to work hard to drive sales activity; the average spend is down by around one-third, quite likely due to discounting, and the higher-spend categories of electricals and home & garden are both in negative territory. It’s difficult to see anything terribly positive on the horizon as we move toward the crucial peak trading period; it could be a very tough one this year.”

Capgemini principal consultant in retail customer engagement Bhavesh Unadkat said: “August was yet another disappointing month for online sales, with low growth rates, as we head into the peak trading period. Conversely, mobile sales have shown stronger performance over the last few months…Retailers are focusing more than ever on their mobile customer experience, combined with increases in app advertising and more secure payment options, demonstrating that there is still room for growth and potentially market share by optimising the channel strategy.”

 

 

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