Online retail recorded its worst January sales growth in three years last month, as the industry’s poor recent sales performance continued into the new year, according to the IMRG Capgemini eRetail Sales Index.
E-commerce saw a 7% year-on-year increase which was slightly above the three-month average of 6.3% year-on-year, however this was offset by December’s record low performance. When looking at the six and 12 month averages, January fell below the growth rates of 7.9% and 11.2% respectively.
Health and beauty enjoyed an 8.1% growth in January while gifts and electricals recorded drops of 25.8% and 19.1% respectively.
Andy Mulcahy, strategy and insight director, IMRG, said: “2019 could well prove to be a very challenging year, and the January growth was a slight improvement on the recent difficult trading conditions.
“The discounting that has been rife since all the way back in July continued into January as expected due to post-Christmas clearance – the challenge for retailers now is how to ease off the reliance on discounting for driving sales. As we’ve moved into February, many sites have either switched off discounting or lessened the prominence of such offers. It’s now a matter of holding nerve, but the positive thing for clothing retailers is the weather – it has been very mild and sunny for this time of year, so that may help to stimulate activity on spring ranges that isn’t linked to discounting; you should never underestimate the potential impact of the British weather on retail.”
Bhavesh Unadkat, principal consultant in retail customer engagement, Capgemini, added: “January growth was half that of last year and below the five year average for the month, failing to recuperate sales from the poor performance in December 2018.
“The cautious start to the year is unsurprising given that pressures on the retail sector remain high as a result of further store closure announcements, continued low consumer confidence and economic uncertainty as we hold our breath, and our spending, ahead of further news on how the UK will exit the EU.”