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Easing Of Lockdown Redirects Spend But Online Sales Growth Remains High

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Although there was some evidence that the relaxation of lockdown rules impacted online retail in July when growth fell against the previous month (-10% vs June), overall sales remained strong – recording growth of +28.3% Year-on-Year (YoY). That’s according to the latest IMRG Capgemini Online Retail Index, which tracks the online sales performance of over 200 retailers.

Indeed, while people appeared to initially divert spend away from online the week after some lockdown rules were lifted (commencing 5 July) – resulting in a -10% YoY drop in growth compared to the previous week – this decline was short-lived and sales for the following week (commencing 12 July) rose again by +27% YoY.

This disruption of pandemic spending patterns could also be seen at a category level. With external social activities restarting, clothing sales were up for the first time since lockdown began, growing by +0.6% YoY in comparison to last month’s fall of -6.5%. The warmer weather and increased amount of time outdoors also triggered sales in gardening to soar to +96.9% YoY. Meanwhile, both the health & beauty and electrical categories saw further rises of +38.3% and +62.4% respectively.

Breaking down the results by retailer type, multichannel retailers continued to outperform their online only counterparts, recording growth of +45.0% versus +8.4%.

Andy Mulcahy, strategy and insight director, IMRG: “When non-essential stores reopened in mid-June, there was no discernible impact on online retail demand. On 4 July, we saw a lot more options become available for people to spend their money – pubs, restaurants, theme parks and, most importantly here, holidays. In the week commencing 5 July there was a -10% Week-on-Week drop in amount spent online compared to the week previous; quite a sharp decline and indicative that people did divert some spend.

“In the week commencing 12 July, YoY growth (compared to the same week in 2019) was up +27%, still incredibly strong but the lowest rate recorded since April. So, was this the start of a slowdown in online sales? Possibly not; since then, the extension of quarantine rules forced many to cancel holidays and the last week of July saw growth rates go up again. The difficulties some business sectors are having in coming out of lockdown may mean online retail growth remains very high over a longer period.”

Lucy Gibbs, managing consultant - Retail Insight, Capgemini: “The increased options for purchasing and opening up of social and leisure activities has triggered a shift in spending patterns amongst consumers. While some spend has started to be deflected away from online, we are also seeing a change in the category mix; the growth in Electricals, and Home and Garden is starting to easing off, though still strong at 62.4% and 74% respectively, however the clothing sector which suffered throughout lockdown, has reported the first positive YOY online growth since February; the highest weekly growth seen in the first week of July for womenswear +16% and third week for menswear +24% since lockdown. As we navigate the next few months it is crucial that retailers are able to continue to enhance the experience both online and in store to meet changing need and emerging challenges that are facing the retail landscape."

Source : IMRG-Capgemini

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18 August 2020

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