Online sales continue two-year decline but may recover by Q4

Online retail sales were down again but after two years of steady decline the fall was the lowest of the year so far.

According to the IMRG Online Retail Index for May, online retail sales fell by 1.2% year on year, which was its best performance of the year to date after seeing -3.5% in April, -2.2% in March, -4.1% in February and -2.2% in January.

Online sales of electricals for May were down by 0.4% and for the year to date were down by 0.9%, and IMRG suggested that growth might be harder to find in the second half of the year.

After the decline reached the worst ever recorded in January last year at -24.4%, IMRG said that the market was edging close to positive territory and predicted that if things continue in line with expectations, positive growth should return by the final quarter of the year.

The index showed that the total market increased month on month by 2.4% over April, which compares with February’s 7.8% decline over January. Overall orders also experienced growth of 2.1% for the first time since November last year.

IMRG speculated that the difference between orders in May versus the peak season of November was 0.7%, which suggested that customers were not experiencing as much buyer hesitancy.

Commenting on the figures for May, IMRG strategy and insight director Andy Mulcahy said: “Good news has been in short supply for online retail since the pandemic growth booms came to an end, and certainly conversion on sites remains suppressed across most categories. The bank holidays produced a notable uplift in spend though, particularly the week leading up to the coronation, where the amount of money spent online increased by +10.5% on the week previous, then did not fall away too dramatically afterwards. Clothing was the category keeping growth down, but the weather has been pretty awful up to this point – now the hotter weather has arrived we might see some better demand that could push us toward positive growth sooner in the year than expected.”

The index has been tracking the performance of 200 online retailers since 2000 and looks at transactions that are fully completed with payment taken.

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