Online retail sales decline continues after September turmoil

Online retail sales take another hit

September saw online sales down for the 18th month in a row, with consumer spending in a state of flux.

Those were the conclusions of the latest IMRG Capgemini Online Retail Index, which said that the “economic turbulence” of September made it difficult to understand “whether shopper confidence has risen, fallen or stayed the same”.

September saw sales fall by a further 3.3%, although that was an improvement on the 4.1% drop in August. The four months before experienced similar declines. September 2021 by comparison saw growth of 6.8%

Although below the three-month average (-2.2%), this performance was still ahead of the six-month (-4.7%) and 12-month averages (-11.8%).

Year-do-date sales were down 12.9%, which was an improvement of 1.1% over August.

IMRG Capgemini said in its statement that consumer spending had never been in more of a state of flux in a month that saw the death of the Queen, the energy cap freeze, and a controversial tax-cutting mini-Budget from the Chancellor that then saw the pound plummet and interest rate hikes.

IMRG strategy and insight director Andy Mulcahy said: “September featured such economic turbulence that it’s very difficult to understand whether shopper confidence has risen, fallen or stayed the same. However, one definite positive was a spike in online spend toward the end of the month when retailers promote their ‘100 days till Christmas’ campaigns. The spend was +17% higher in week four – the second highest rate of the past four years for that period. That at least suggests customer interest and responsiveness; we can’t know how the turbulence will unfold over the next few key months for retailers, but if that spike had not occurred this year, it would have been very concerning.”

The report said that sales of electricals online had stayed consistent and were down by 8.2%, with the heaviest declines in the garden sector, which fell 19.3%. It also showed that the premium sector online declined by 15.1% compared with the mid-market sector, which was relatively flat.

Simon Binge, commerce senior manager, customer transformation at Capgemini, added: “Despite an eventful month of disruption for UK shoppers, the online retail market performed largely in line with the previous four months, with an average -3.3% YoY sales decline for July to September.  While overall spend displays a small decline YoY, if we explore this a little deeper we can see evidence of shoppers trading down, with the mid-market retail sector being the clear beneficiary.

“The premium market sector saw a YoY revenue decline of -15.1% for September, but the mid-market sector was relatively flat (-0.2% YoY), building on a similar story from previous months (+0.1% August, +3.5% July). Whether the premium sector can entice shoppers back during the next few months of expected promotional activity or the mid-market sector continues to win the battle for the wallet remains to be seen.”

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