January sees lowest rate of online retail growth ever recorded


January 2022 has seen the lowest rate of online retail growth ever recorded in 22 years of tracking, with a decline of 24.4% year-on-year (YoY), according to the UK’s ecommerce association IMRG.

Alongside this, IMRG’s index, which monitors the online sales performance of some 200 retailers, also recorded the lowest annual growth rate ever for 2021, with just 2.7% total market growth. .

The figures indicate that last month’s slump comes as a result of retailers competing against a pandemic-influence growth rate of 61.8% from January 2021, when the UK was under lockdown – causing ecommerce to experience a “significant boom”.

Fast forward 12 months and online retailers are not only being marked against this growth rate, but restrictions have also been lifted and in-person shopping is growing in popularity.

However, the average basket value (ABV) was up, rising to £115 in January after dropping to £106 in December. In the first half of 2021 the ABV experienced “huge increases”, although it has been steadily falling since August. January 2022 is the first month that it has started to increase again.

At a category level, the report found fashion has the highest rate of growth in January, with clothing up 5.4% YoY, and womenswear by 25.2%, menswear by 16.0% and footwear by 19.4%.

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The categories with the poorest growth included skincare, (down 48.2%), make-up (down 45.7%)and electricals (down 36.7%).

“The first quarter of 2021 had a severe lockdown in place which drove huge online growth, so the year-on-year comparisons for the early months in 2022 are going to be harshly negative as a consequence,” IMRG strategy and insight director Andy Mulcahy said.

“This can make it seem like online sales are in freefall, whereas actually it is just a natural rationalisation of the 50%-60% increases we saw this time last year.”

Capgemini senior manager, retail lead for analytics and AI Lucy Gibbs added: “January was a mixed story for retail. Our Online Index reported the largest YoY fall in sales ever, and the high street claimed the opposite. This is due to the now familiar Yin Yang effect on YoY revenues when comparing to last year’s lockdown store closures.”

“As we emerge from the pandemic, the annual results will start to normalise and 2022 will hopefully bring a much more stable trading period, however the outlook still remains uncertain as we realise the fall out of economic and logistical challenges from the last two years.”

Gibbs explained that the drop in orders this month is greater than revenue as ABV has increased by 24%. “This could be an early indicator of increased prices, reflecting the ongoing supply chain disruption and underlying cost challenges,” she said.

“Capturing share of wallet among increasing bills and pent-up demand for travel, events and eating out will continue to prove to be the focus as we navigate 2022.”

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