Online retail growth in freefall in May, IMRG Capgemini Online Retail Index shows

Online retail sales growth fell -8.7% Year-on-Year (YoY) in May 2022, despite being measured against a negative performance in May 2021 (-6%), as trading conditions continue to be very tough. Bucking a trend for positive growth between the two months, May’s results also represented a -0.6% dip Month-on-Month (MoM) against April. That’s according to the latest IMRG Capgemini Online Retail Index, which tracks online sales for 200 retailers.

Breaking the month down, there was some variation in performance by week, with week one recording the lowest growth at -10.9% YoY, whilst week three was almost positive at -0.3% YoY. This may have been a Jubilee boost – with people purchasing patriotic clothing and other items in advance of the bank holiday – without that, performance might have been even worse.

Despite widespread discounting, the Average Basket Value (ABV) has actually been rising notably since January 2022, reaching a new all-time high of £151. This is likely due to a number of factors including inflation, customers ordering multiple items at once in order to avoid repeat delivery fees, and a general preference for higher quality items to avoid having to buy again in the near future. Website traffic was also up 8% YoY, though retailers are reporting lengthy purchase cycles as consumers sit in the consideration stage for longer.

At a category level, the majority tracked in the Index reported negative growth, again often against negative figures for the same period last year. Among those, the categories seeing the worst performance were health and beauty (-28%) and home and garden (-23%). On a better note, clothing continues to see strong performance – with sales rising by +14% overall; +18% for womenswear and +12% for menswear.

Andy Mulcahy, strategy and insight director, IMRG, said: “There’s no dressing it up, May’s performance was pretty awful online. April’s results suggested growth might be flat, but it is clear now that the economic situation is having a deep impact on demand; if it wasn’t for the Jubilee, which produced a slightly better week than the others, the decline might have been double-digit against negative growth for the same month last year. The one bright area is clothing, where growth was strong this month against +13.5% in May 2021. It seems to be a category making up for lost time, following almost flat growth in 2020; could be that it is now simply benefiting from the increased number of people shopping online, combined with a general sense among the UK public that the pandemic is over and they can go out as they please again.”

Bhavesh Unadkat, head of brand and content, frog, part of Capgemini Invent, said: “Digging into May’s negative result, a closer look at where consumers are willing to spend money offers some interesting insights. Countering what you might expect as pockets tighten, the sales performance of budget retailers actually plummeted by -15% last month – with luxury retailers also experiencing a fall, although less dramatically at -3.6%. In fact, it was only the mid-market retailers who saw any type of growth at +0.5%. With less disposable income to hand, this definitely lends weight to the speculation that consumers are seeking out longer-lasting quality in their goods.”