The online retail boom is fading but the home sector is outperforming

Online retail sales fell -12% yoy in April in a period of rising inflation, according to the latest IMRG Capgemini Online Retail Index, which tracks the online sales performance of over 200 retailers.

With last month’s results representing the first time in two years that the index was not skewed by pandemic lockdown comparisons, expectations for a return to pre-Covid patterns were high. However, the results showed that there was no actual growth in online sales – with last month’s performance merely reflecting April 2021’s +12% growth. This mirroring was also reflected in the weekly results, with growth in the fourth week of April 2022, for example, at -10% compared to +10% in the same week last year.

On closer inspection, there are signs that the current economic climate is having an impact on the Average Shopping Cart Value (ABV), which hit an all-time high of £146 in April, £3 above the previous pandemic record set in August 2021.

With rising supply chain costs feeding through to product prices and the cost of living showing no signs of slowing, shoppers are taking longer to make purchasing decisions and retailers are having to rely more heavily on rebates to spur activity — especially for smaller goods. However, the ABV also shows that many consumers are still willing to buy larger ticket priced items or buy in bulk to get better value for money.

Andy Mulcahy, Strategy and Insight Director, IMRGShe says: “Throughout the pandemic, there has been much speculation about what the ‘new normal’ might be when things settle down.

“After two years of huge increases in online volume, the growth seems to have ended. Not only is this a reflection of the effective end of the pandemic on many people’s minds – the new phase of higher costs and bills is very unpredictable Patterns of behavior among shoppers Many retailers are reporting a sluggish response to activity and erratic spending, and it feels like this would only be the start of a difficult year for UK buyers.”

Lucy Gibbs, Senior Manager, Retail Head of Analytics and AI, Capgemini, adds: “Demand for certain categories has become less predictable during the pandemic due to external factors and changes in behavior and lifestyle. As we move further, we are seeing some signs of a return to normal – however, it is clear that the shift in priorities around new cost pressures and economic factors will also impact future demand patterns.

“If we project pre-pandemic trends into the future, we can deduce which categories are still outperforming – home & garden and health & beauty are still well ahead of what we would expect, despite posting a negative this month Record YOY growth. Clothing is roughly in line with what we would expect and is recovering after losing in the pandemic.

“As uncertainty persists, it reinforces the need for retailers and brands to remain agile and resilient – ​​listening to customers’ needs, with considerations likely now to focus on price, necessity and value to create an exceptional experience and to drive other factors to maintain loyalty.”

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