Difficult trading conditions continued into the new year for e-commerce, where total market online retail revenue growth experienced a -2.2% YoY decline, presenting negative-on-negative growth against the huge, lockdown-affected rate of -22.5% in January 2022. That’s according to the latest IMRG Online Retail Index, which tracks online sales for 200 retailers. It also saw a sharper-than-usual month-on-month (MoM) decline, where revenue dropped by -28.7% against December (between 2019-21, it was in the range of -17% to -21%).
Growth in traffic to online retail sites was often positive during 2022, albeit marginally, but that too has declined for a few months running now, down -5.2% YoY in January against -7.7% in January 2022 for the overall market, though some categories are faring better than others.
Inflation is also evident in the figures, with the total market average basket value increasing from £113 in January 2022 to £130 in January this year. Meanwhile, retailers are struggling to get their customers to convert at the same rate as before the cost-of-living crisis started to bite; while the average conversion rate for total sessions remained roughly flat against January 2022 (around 3.2%), it is substantially down against two years ago in January 2021 when it was 4.1%.
Looking at online retail product categories, gifts sales continue to be tough with a -16.1% YoY decline in January 2023 against -14.2% in 2022. Many retailers who sell clothing might also have reduced confidence for 2023 as the online category experienced a -4.5% YoY decline in revenue against a modest +0.9% for the same month in 2022. Footwear was the single positive-territory growth subcategory of clothing in IMRG’s index, at +4.7%. Another stand out performer this month was the subcategory of home & garden, gardening, that saw a significant online growth increase of +43.8% from -50.5% in January 2022.
Andy Mulcahy, strategy and insight director, IMRG: “These disappointing, though not entirely unexpected, revenue and conversion rate results are in line with IMRG’s 2023 forecast for online retail, which expects YoY declines in total market revenue growth (-3%), home & garden and electricals categories (both -5%), health & beauty (-4%), gifts (-7%), and no growth is predicted for clothing. Shopper confidence is the key however, if there are any notable improvements in the economic situation we should see that conversion rate nudge up again as people feel a bit more secure in their financial situation, so can spend out on more discretionary purchases. From January’s results however, it feels little way off yet.”
