After July’s figures signalled a possible reversal of fortunes (dipping only -2.3%), online retail sales growth declined -4.1% YoY in August 2022, marking the 17th month in a row of negative growth since May 2021 – according to the latest IMRG Capgemini Online Retail Index.
MoM sales were down -6.2% against July, markedly lower than the -2% recorded in 2019, which was the last year unaffected by pandemic skews.
While August featured some of the hottest days this year, it would be expected that some categories, specifically garden and beer, wines and spirits, might experience an uplift. However, clothing was the only category to show positive YoY growth, while garden (-24.5%), and beers, wines and spirits (-20.6%) actually saw the sharpest declines.
Looking at these results in more detail, July 2022 saw England win the UEFA Women’s Euro 2022. For that month, clothing, and womenswear in particular, recorded their highest positive growth in the last 12 months. August’s steep decline to low single-figure growth for these categories suggests that the football could well have been a contributing factor to their positive performance.
Taking a look at the YTD performance, online retail sales have recorded -14% negative growth since January. With plenty of categories falling behind on online sales growth expectations, the rest of the year is looking fairly bleak given the financial pressures people are under, with retailers concerned about trade over the peak period, states IMRG Capgemini.
Andy Mulcahy, strategy and insight director, IMRG, says: “It’s been a difficult summer for online retail, with many retailers apprehensive about how performance is going to be over peak trading. The hope is that the energy cap announcement will do something to boost shopper confidence a bit before we get into November, but even then, the omens are not good. Usually, the amount of money spent online increases and decreases interchangeably in line with activity retailers are undertaking, but across July and August we recorded five weeks of decline, which is rare – there will need to be a great deal of sales growth to make up for Black Friday and peak to be positive.”
Simon Binge, commerce senior manager, customer transformation at Capgemini, adds: “As we come to the end of a largely disappointing summer from a growth perspective, the focus turns to a critical peak trading period. While the prospect of promotional activity around Black Friday, the FIFA World Cup and Christmas should tempt shoppers to part with their hard-earned cash, retailers will continue to struggle with balancing rising costs and enticing discounts.
"We can see from Q2 that retailers are already being cautious with promotions, with only 33% of sales being generated by promotional activity or discounted price, versus 42% during the same period last year. With this in mind, retailers will need to explore other opportunities for increasing orders and basket value outside of deep discounts.”