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September online retail performance reflects a complicated month

The online retail market continued to see negative-on-negative Year-on-Year (YoY) growth in September, with UK sales down -3.3%. That’s according to the latest IMRG Capgemini Online Retail Index, which tracks online sales for 200 retailers. Though this represented a slight improvement on August’s -4.1% result, the performance was not significantly different to that recorded for the past four consecutive months. It also compared to September 2021 growth of +6.8% YoY.

On the whole, September was a complicated month for gauging customer confidence. The UK had 10 days of national mourning following the death of the Queen on 8th September, which happened on the same day the energy cap freeze was announced. This was followed by the Government’s mini-budget of wide-ranging tax cuts a few weeks later. How that balances against declines in the pound and rising interest and mortgage rates will become more evident over the coming period, but at least immediately the Month-on-Month growth between August and September came in where it should (up +5.4%) for this time of year. While this could be seen as a positive indicator moving into peak trading – as could the £5 rise in the average basket value (ABV) – the conversion rate remains down on last year and unresponsive to retailer activity. 

In terms of online categories, clothing was the only one to see positive growth in September, rising from +2.8% in August to +4.3%; this didn’t reflect in all its sub-categories, however, with menswear still struggling at -3% (though up from -7.1% in August). Elsewhere, electricals (-8.2%) remained consistent – recording a difference of only 0.7 percentage points against August; and gifts fell -9.3%. The heaviest declines in September were for beer, wines and spirits (-27.3%) and garden (-19.3%).

Even though September presented many macro variables, the Year-to-Date (Jan-Sep 2022 vs Jan-Sep 2021) figure remained fairly flat at -12.9%, which was only a +1.1% improvement from August.

Andy Mulcahy, Strategy and Insight Director, IMRG: “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.”

Simon Binge, Commerce Senior Manager, Customer Transformation at Capgemini: “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.  Whilst 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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