Online retail boom may be over, says analyst

Online retail sales in April fell by 12% year on year and analyst IMRG Capgemini suggests this may signal an end to the online sales boom.

The April figures are the first, said IMRG Capgemini, not to be skewed by lockdown comparisons and give a clearer indication of growth against the three-, six- and 12-month averages of -21.9%, -17.5% and -13.3%.

The analyst also pointed out that April’s figure was an improvement over the -25.7% figure achieved in March

The index tracks more than 200 online retailers and also showed that, despite rising inflations and the soaring cost of living, month-on-month growth was up 3.8% and average basket value hit a record high of £146, up £12 on March, which was £3 up over the previous pandemic record set in August 2021.

The Index also reported that after their highs of 2021, electricals have seen poor performances for the past few months at -17.8% in April, with average basket values also down.

Commenting on the results, IMRG strategy and insight director Andy Mulcahy, said: “Throughout the pandemic, there was much speculation as to what the ‘new normal’ might be once everything has settled down again. After two years of huge volume increases online, it would seem that growth is now over – this is not just a reflection of the pandemic effectively coming to an end in many people’s minds, the new phase of higher costs and bills is creating very unpredictable patterns of behaviour among shoppers. Many retailers report sluggish response to activity and erratic spending, and it feels like this is only the start of a tough year for UK shoppers.”

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 Looking to the future, Lucy Gibbs, senior manager, retail lead for analytics and AI at Capgemini, said retail brands will need to remain ‘agile’: “Demand for certain categories became less predictable during the pandemic due to external factors and changes in behaviours and lifestyles. As we start to move on, we are seeing some signs of a return to normal, however it is clear that shifting priorities around new cost pressures and economic factors will also influence future demand patterns.

“As uncertainty continues to reign, this reinforces that retailers and brands will need to remain agile and resilient – listening to customer needs, where consideration will likely now focus on price point, necessity and value, to create a standout experience and drive other factors to maintain loyalty.”

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