Clothing hardest hit as online retail growth stutters after World Cup
UK online retail sales slipped to their lowest year-on-year growth in 2018 so far this July, as consumer spending slumped in the weeks following England’s exit from the FIFA World Cup, according to the latest IMRG Capgemini e-Retail Sales Index.
Online sales increased by just +10.0% year-on-year in July, well below the three, six and twelve month rolling averages of +14.7%, +15.0% and +12.7% respectively. Clothing was particularly badly hit with a growth rate of just +7.5%, its lowest growth rate of 2018 so far.
Incorporated in the July clothing figures were the most significant decreases seen in Footwear (-30.6% year-on-year) and Accessories (-13.4% year-on-year) since 2013.
The lacklustre performance in July came on the back of a record H1 for online retail growth, which looked set to continue after the first week of July, with sales up by +14.4%. However, after England’s semi-final exit on 11 July, this took a dramatic turn, and even Amazon Prime Day could not prevent growth shrinking to +3.7%, +8.6% and +5.1% in the remaining weeks of the month.
Bhavesh Unadkat, principal consultant in retail customer engagement, Capgemini explained: “A few factors contributed to the fall in online customer spending this month, but significantly last July saw a peak in conversion rate due to activity around Prime day – something that was not repeated this year. Combined with the decrease in overall site views and the highest increase in July basket value in over five years, it suggests that retailers have had to focus less on discounting and clearance; an effect of lower price-points throughout the year due to the competitive nature of the high street combined with good weather driving early summer spending.
“This month’s slowdown could also serve as a reality check for the outlook ahead. GFK has reported a decline in consumer confidence Index this month, and the Major Purchase Index decreased two points to -2. The interest rate hike could also impact the amount of disposable income people have to spend, while consumers are being more cautious after high credit card spend over the summer. After the boost from this summer’s sunshine and events, retailers need to focus hard on winning the battle for spend and share of wallet, as H2 will be highly competitive with a less transactions ringing through the ‘online’ tills,” he added.
IMRG strategy and insight director Andy Mulcahy said the unusually warm weather early in the summer had also played a part, though some non-fashion sectors reaped the benefit. “The British weather is often the cause of much misery or joy for British retail, and July was no different. The main beneficiary of the prolonged heatwave in July was the garden sector, with 22.4% year-on-year growth, which is in contrast with recent difficulties experienced by some on the high street.
"Shoppers keen to capitalise on the sunshine focused their attention on gardening products – which was also to the detriment of the home sector, which reported a year-on-year decrease of 5.8%. The positive weather, which started in May, has transformed the garden sector’s 2018 performance into an impressive 24.5% year-to-date growth.”
