Ecommerce growth declines for 26th month in a row

June reported a decline in online retail revenue of -1.2% YoY, the 26th month in a row that growth has been negative or flat.

According to IMRG’s Online Retail Index, which tracks the online sales performance of 200 retailers in the UK, total online market revenue increased +1.4% on June compared to the previous month, which is in line with the growth trend for this time of year.

Promisingly, the traffic metric, after seven months of decline, experienced positive growth in June, at +1.9% YoY. From a MoM perspective, traffic increased by +5.4% from May, which reveals greater customer interest and hints to the positive impact communal celebrations have on trading, such as Father’s Day and Pride.

One explanation for increased traffic on retail sites and a reasonable, if still just negative, performance for revenue relates to the weather. It took until June for reliably warm weather to arrive this year, and when it did, it was a heatwave and the hottest June on record, which has a big impact on demand in some categories such as garden (+10% YoY) and clothing which, while still down -2.3% YoY, saw some positive weeks in a year where growth has been very tough to find in that category.

Traffic performance isn’t always synonymous with revenue performance, proven by the example of small appliances which has seen a decrease in traffic throughout 2023 relative to 2022. Since March 2022, YoY revenue has grown for small appliances, achieving +47.1% in June 2023, and within the last month, there has been a 32.3 percentage point increase in revenue for this subcategory.

Andy Mulcahy, strategy and insight director, IMRG, said: “Following the pandemic boom, when lockdowns drove huge surges in online purchases and it appeared possible that its penetration into retail overall had rocketed forward several years, the market has actually been in decline ever since.

“However, while negative growth has become normalised, the trend lines are heading back toward positive growth again, likely in time for the most important time of the year for retail – Black Friday and Christmas. Provided, of course, the looming mortgage crisis doesn’t blow everything off target again.”

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