online sales

23 Jan 2019

Online sales slow as Christmas failed to revive spending

In 2018 online retailers experienced their worst December sales growth in nearly twenty years, as shoppers reined in buying over Christmas, capping off a turbulent year.

According to the IMRG, low consumer confidence was the reason spending had been low over the holiday period. Their report shows that sales rose by only 3.6% in December, compared to a growth of 12% for 2018.

After online retail defied the downturn on the high street to record 16 per cent year-on-year growth in the first six months of the year, boosted by external factors such as the Beast from the East, the World Cup and the Royal wedding, the second half saw a dramatic slowdown, with 8.4 per cent year-on-year growth for that period.

The IMRG report recorded data from more than 200 major retailers, indicating that even online-only companies suffered in the last quarter of the year.

Over the Christmas week, sales for electrical good rose by only 2%, where as for clothing there was a 12% rise.

Andy Mulcahy, strategy and insight director at IMRG, said:

“The first half of 2018 was actually very strong for online retailers – it resisted and arguably benefitted from the tough climate that impacted trade for store retail. It is only the second half of the year where the suppressed confidence and spend, evident in so many other sectors, has spread to online retail; the macro-economic situation must be exerting pressure here, particularly with Brexit now entering its crunch period in the first quarter of 2019.”

As a reflection of the continuing uncertainty in the UK, Capgemini and IMRG have forecast that online retail growth will fall to nine per cent year-on-year for 2019 as a whole.

Mulcahy, added:

“If there had not been so much uncertainty and shopper confidence had not been so negatively impacted toward the end of the year, it seems a reasonable bet that online retail sales growth could have been much stronger than 11.8 per cent for 2018.

“If Brexit can be resolved so that a course, whatever that may be, is agreed and pursued, it may help to build shopper confidence again with online likely to be the main beneficiary from a retail perspective.

“However, if 2019 proves to be a year of continuing uncertainty, with repeated delays and political instability causing market disruption, it may prove to be a tough year for many businesses to navigate – as we found out in late 2018, online is not immune from that.”

By Lyba Nasir