Online retail sales drop for 4th month in a row as supply issues bite

Online retail sales dropped by a further 9.3 per cent in August marking the fourth consecutive months of decline.

While the UK’s ecommerce sales decline slowed slightly from July’s fall of 9.6 per cent, August’s performance was still well below the six- and 12-month averages of 2.25 per cent and 21.37 per cent growth.

According to the latest IMRG Capgemini Online Retail Index, this marked the fourth consecutive month of decline, following drops of 9.1 per cent and 14.1 per cent in May and June.

“Interestingly, this was mainly driven by a 7.3 per cent drop for multichannel retailers, with online only retailers actually recording a growth of 1.7 per cent in August compared to July,” Capgemini’s managing consultant Lucy Gibbs said.

“This could indicate that multichannel retailers are focusing their efforts to get consumers into their shops again, given that British consumer confidence has reached pre-pandemic levels for the second month in a row according to GfK’s Consumer Confidence Index.”

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However, there were signs that the decline was slowing, with the decline slowing from 7.7 per cent in the first week of August to 2.9 per cent in the final week.

This slowdown was also apparent at a category level, with declines becoming less severe than previous months.

Health & Beauty remained the worst performer dropping 32.8 per cent, slowing from a 36.1 per cent decline a month earlier.

Meanwhile average basket volumes (ABV) jumped to its highest level this year at £149 driven by strong performances in home, garden and electricals sales.

Conversely, conversion levels sunk to their lowest rates this year at 3.14 per cent, which IMRG’s strategy and insight director Andy Mulcahy says is likely to be down to ongoing supply issues.

“With conversion dropping, it suggests people are encountering out-of-stock items or not finding what they were looking for, but when they do find something in stock, they buy it without shopping around for a better price,” he said.

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