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Sun fails to shine for online retailers as sales slump in July

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Online retailers were unable to build on improved sales in June, seeing record low levels of July growth, according to the latest IMRG Capgemini eRetail Sales Index.

The index, which tracks the online sales performance of over 200 retailers, reveals that online sales growth slowed to +4.4% year-on-year (YoY) and fell by -5.7% month-on-month (MoM).

This represents the lowers ever July YoY increase, coming in well below the 3-month, 6-month, and 12-month rolling averages (respectively +4.9%, +4.9%, +6.5%).

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It shows that retailers were unable to capitalise on the summer heat wave or on notable online events such as Amazon Prime Day.

Accessories and womenswear were down YoY (-13.3% and -8.7% respectively) while menswear grew 10.4% – significantly lower than the 32.2% achieved in June.

Andy Mulcahy, strategy and insight director at IMRG, says: “Online sales growth had been subdued throughout the first half of 2019, but in June there seemed to be a bit of a bounce-back that hinted toward growth picking up again.

“However, there is now evidence that the June performance was artificially inflated by heavy discounting to stimulate sales activity, and it seems likely that some of that volume was pulled forward from July.

There is usually a dip between June and July, but this year it was down -5.7%, a sharper decline than the five-year average of -1.1%. The clearest indication came from clothing, which recorded its strongest growth in over a year in June (+15.7%), but the average basket value (ABV) was down around 25%, suggesting that the rise was driven by discounting.”

Bhavesh Unadkat, principal consultant in retail customer engagement, Capgemini, adds: “Over the last three months pure online retailers have fared better than multichannel players online, maintaining consistent growth above +8%. This compares to a much more volatile performance, jumping from -0.1% to +8% in May to June, and +4% in July, indicating that multichannel online sales are more sensitive to sales activity as consumers seek out the best deals.

“The outlook remains uncertain for retailers into half two as consumer spending is cautious and confidence low, yet GFK has reported that the major purchase index has increased six points back into positive territory this month. This could hint that customers will be more willing to make considered purchases over the coming months rather than impulse buys.  As we lead into the peak season retailers will therefore need to focus on winning share of wallet amongst an increasingly competitive online market.”

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Patrick Cremona

The author Patrick Cremona

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