After a disappointing May, which saw online sales suffer their worst growth on record (+1.9%), June’s results represent the strongest growth so far this year, and are well ahead of the three-month, six-month and 12-month rolling averages of -0.5%, +5.4%, +6.9% respectively.
In terms of standout category, clothing recorded the highest growth so far this year with a rise of +15.7%. Categories with positive performances include health & beauty (+20.4%) and home and garden (+9.8). But the negative trend continued for electricals (-23.0%) and Gifts (-23.4%).
Andy Mulcahy, strategy and insight director of IMRG, said: “The trading environment for online retail in the first half of the year has been tough; from March to May, growth was just +2.2%. June then can be interpreted as a bounce-back, particularly given it was building on strong growth of +16.1% in June 2018. However, discounting has been heavy so the margins achieved may not be high. Online clothing sales were up +15.7% but the average basket value for clothing was down -25%. That doesn’t suggest shopper confidence is very high.
“It is the summer sales period now, so end-of-season sales campaigns are in full swing. The key now for retailers is whether they can come out of discounting and maintain a reasonable level of sales growth before we get too close to the Black Friday period. Otherwise we may be in for another difficult peak where the rates of discount are wider and deeper than many retailers would like.”
Bhavesh Unadkat, principal consultant in retail customer engagement of Capgemini, said: “June had a positive sales performance this month, reporting highest YOY growth this year. However this is to be considered with a note of caution; consumer confidence is down 25% versus last year, and the overall performance is masked by weaker comparable in June 2018 and higher discounting activity, indicated by higher conversion rates and lower basket values.
“The change of tune in June was also not enough to counter the overall quarter performance and Q2 reported even slower growth than Q1 (+3.5% vs +7.5%), albeit up against a big Q2 2018. The sectors that where was affected considerably in the second quarter were Garden (-45%), Beer Wine & Spirits (-6%), and Accessories (-11%), partly driven by the weather and bumper events driving positive and impulsive spending last year. Only Clothing has bucked the trend (+11%), with a stronger performance in the second quarter. However, the late timing could impact the profits for retailers. The hint of optimism lies with the hope that performance picks up in the second half against weaker comparisons last year.”
IMRG (Interactive Media in Retail Group) is a UK membership community comprising businesses of all sizes – multichannel and pureplay, SME and multinational – and solution providers to the industry. Capgemini bills itself as a global leader in consulting, technology services and digital transformation.