With bad weather, Brexit and no Royal Weddings or football tournaments to boost the public mood, online retail sales suffered the slowest growth on record in May.
According to the latest IMRG Capgemini eRetail Sales Index, retail sales only increased by 1.9% year-on-year in May, continuing the discouraging 2019 trend of below-average sales growth. When compared to this time last year, which saw the strongest May growth for online retail since 2010, the state of online retail remains rather tough.
Further sector analysis in May shows a number of categories struggling significantly. Electricals (-27.5%) and gifts (-18.5%) continue the downward trend seen since last November and September respectively.
Clothing has had a much slower growth rate vs. last year’s performance (+8.2%): Menswear was down -13.3% against very strong results last year (+23%) and womenswear (-4.8%) continued the trend of single digit or negative growth this year. Accessories, which has seen successful growth in previous months, has now reported its worst performance in 10 years; down -20.0% YoY. Footwear was the only clothing sector to see positive growth (+6.7%).
However, the health & beauty sector continued its a strong monthly performance with +22.6% compared to +2% total vs last year, with the explosion of consumers focusing their attention on health and wellbeing as well as the rise in celebrity beauty endorsements.
Despite last month’s dramatic drop, m-commerce is up in May by +8.4% with smartphones reaching +35.0% and tablets flat at +0.3% against last year.
Strategy and insight director at IMRG, Andy Mulcahy, comments: “When tracking the movement of something in an index, you sometimes get results that are a bit skewed by the growth rate you are comparing against. May 2018 was one such month – with the early summer heatwave, Royal Wedding and a World Cup looming, people seemed happy to spend out pretty lavishly on retail, so May 2019 was always going to be anchored by it. That said, 1.9% growth is far lower than we might have expected; indeed, it’s the lowest since we started tracking nearly 20 years ago, so it seems there is something more going on here.
The fact is that retailers are caught in a perfect storm at the moment – with all the problems on the high street, changing customer behaviour, shopper confidence low due to all the CVAs and negative coverage of major brands, a shifting competitive landscape; and of course even the weather is refusing to provide any relief. It’s proving tough to find any positives in the sales performance at the moment.”
Principal consultant in retail customer engagement, Bhavesh Unadkat, encourages other sectors to watch the health and beauty market, which continues to grow.
He says the health and beauty market is quick to respond to consumer demands – for example changing ingredients to be more organic and packaging to be more sustainable – whilst also embracing the role of social media and influencers.
Bhavesh Unadkat says: “Over the last few years Health and Beauty brands have responded to the increased demand for natural ingredients and attention on environmental impact through exciting developments in product innovation, marketing and consumer experience. Digital has also had a big role, responding to raised social awareness and innovation in technology which has paved the way for initiatives for growth in this space, for example Wearables like Mapo and Fitbit are great examples of this as well as the creation of new business models like the face gym and the increased importance of influencer campaigns. This plays well into the share of online sales; Kantar has reported that online penetration for cosmetics has increased to 21%.
“Therefore, when wallet share is being fought over, adapting to customer needs and what is important to them is key; if other sectors can integrate these principles into their offering to differentiate, diversify, and better engage shoppers there will be a greater chance of them staying ahead of the game.”