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Feb 22, 2019
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UK e-sales growth is weak again but at least fashion stays positive

Feb 22, 2019

UK online retail was lacklustre again in January with a year-on-year increase of just 7%. That's roughly half of what the growth was a year ago and the second lowest monthly figure since August 2015.

Online shopping grew in January but at a slower rate

However, against that is the fact that the market is maturing and so explosive growth is likely to be much harder to come by. Plus the January figure was marginally above the three-month average of 6.3%, although it was below the six-month average of 7.9% and the 12-month figure of 11.2%.

That’s all according to the latest IMRG Capgemini eRetail Sales Index. The slow growth was particularly problematic as it came just after the all-time low seen in December.

That said, there was some specific category strength with the report calling out “a more positive month for the fashion sector”. Clothing was up 3.1%, which may have been lower than the overall 7% figure, but can still be seen as a good result for a sector that’s heavily under pressure.

And within fashion, there were some spectacular performances with menswear up 28.1%, accessories rising 37.9% and footwear up 27.8%. Womenswear grew a more modest 5.1%.

Health and Beauty was also buoyant, the report saying that it “continues to resist the struggles of the overall index, enjoying 8.1% growth in January.” 

However, it was a bleaker month for Gifts and Electricals, which recorded 25.8% and 19.1% falls respectively. That’s perhaps no surprise given that January isn't it usually a big month for those categories, although the clearance sales might have been expected to boost them.

Andy Mulcahy, strategy and insight director at IMRG, said: “2019 could well prove to be a very challenging year, and the January growth was a slight improvement on the recent difficult trading conditions. The discounting that has been rife since all the way back in July continued into January, as expected, due to post-Christmas clearance. The challenge for retailers now is how to ease off the reliance on discounting for driving sales.” 

He added that as we’ve moved into February, many sites have “either switched off discounting or lessened the prominence of such offers. It’s now a matter of holding nerve, but the positive thing for clothing retailers is the weather – it has been very mild and sunny for this time of year, so that may help to stimulate activity on spring ranges that isn’t linked to discounting; you should never underestimate the potential impact of the British weather on retail.”

Bhavesh Unadkat, principal consultant in retail customer engagement at Capgemini added: “The cautious start to the year is unsurprising given that pressures on the retail sector remain high as a result of further store closure announcements, continued low consumer confidence and economic uncertainty as we hold our breath, and our spending, ahead of further news on how the UK will exit the EU.”

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