Online Retail Results Suggest Consumers Are Browsing, Not Buying

• Online retail sales fell by -12.5% Year-on-Year (YoY) last month – a further drop on August’s -9.3%
• September’s result came in well below the 12-month average of +17.13% but was also beaten by the 3-month (-10.06%) and 6-month (-6.83%) averages
• Month-on-Month performance (+2.1%) rose for the first time since the high street reopened, but failed to match pre-pandemic patterns
• Beers, wine and spirits and garden continue to report strong growth, but the broader category picture was far less positive

Despite evidence of an upturn in growth last month, online retail sales took a turn for the worse in September, falling back to -12.5% Year-on-Year (YoY). That is according to the latest IMRG Capgemini Online Retail Index, which tracks the online sales performance of over 200 retailers. This was particularly driven by the first week of the month, the traditional back-to-school week, which saw the steepest drop (-12.94%). There were some positive signs when looking at the Month-on-Month (MoM) comparison (+2.1%), which was up for the first time since the high streets reopened in April – however, pre-pandemic patterns indicated this would typically be closer to +6%.

Breaking the results down further, September’s subdued sales suggest consumers are browsing, and not buying, which could result from a variety of factors including supply chain shortages and consumer caution in the face of rising inflation and gas prices etc, or Christmas browsing starting earlier. This is evident when looking at the conversation rate, which was down from 3.9% in September 2020 to 2.8% for the same month this year.

At category level, beers, wines and spirits (+18.6%), garden (+5.2%) and clothing (+11.1%) all maintained good levels of growth – and were the only ones to do so. Based on year-to-date patterns, this is expected to continue into the new year for these three categories. Meanwhile, as with last month, health & beauty was the worst performing of the group – down -32.7% as part of a sustained downward trajectory.

Lucy Gibbs, managing consultant – Retail Lead for Analytics & AI, Capgemini: “Online sales were more subdued in September, and basket value decreased month on month for the first time this year. This has been reflected across the market alongside a dip in consumer confidence as back to school and a push for a ‘return to normal’ coincides with concerns on energy bills, costs, and tax hikes. Supply chains are also under significant strain, presenting challenges for retailers as we move into the peak trading period. How retailers will navigate the build up to black Friday and Christmas events will be crucial to manage availability of stock throughout the period and maintain customer service levels”

Andy Mulcahy, strategy and insight director, IMRG: “Many retailers are reporting that Christmas searches on their sites started very early this year. One possibility for the relatively low performance in online sales in September may be related to that point. If shoppers were browsing for ideas in September, the purchasing may start to fall in October. The conversion on sites in September was down around 25% on the same time last year, but that has been a trend across many months. If the purchasing accelerates early, it might spur some to launch their Black Friday campaigns even earlier than they did in 2020, which could lead to an extended event this year.”

Source : IMRG-Capgemini

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