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Warm February Contributes to Online Sales Revival

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February’s unexpectedly warm weather inspired a revival in online retail sales last month, as the industry recorded its strongest growth (+9.4% YoY) in six months, according to the IMRG Capgemini eRetail Sales Index. Despite falling below the five-year average of +10.6% year-on-year (YoY) for February, the growth provided some relief for online retailers after recent struggles.

The impact of the warm weather – which included the hottest February day on record – was particularly reflected by the Garden sector, which experienced +33.3% growth compared to last year. Health and Beauty also built on its recent strong performance with a +13.4% YoY increase for the month. In contrast, Gifts (-27.6%) and Electricals (-15.4%) both fared poorly during the month, and Clothing spend remained relatively flat (+0.9%) – perhaps due to it being too early for spring lines.

Andy Mulcahy, strategy and insight director, IMRG, said: “Discounting had been very widespread across retail since July 2018, owing to the difficult and unique trading environment that retailers are facing. Following January clearance, many either switched off discounting or at least reduced the prominence of it – and it’s the multichannel retailers that seem to have navigated the shift more successfully.

“Those with a high street presence recorded a rate of online sales growth almost three-times greater than their online-only counterparts and the basket values are also revealing; the February average spend on multichannel sites was down -7%, while for online-only retailers it fell more sharply by -17%, suggesting perhaps that they still maintained a greater reliance on discounting.”

Bhavesh Unadkat, principal consultant in retail customer engagement, Capgemini:February is usually a transitional month as spring lines take over the ‘shopfloor’ and clearance continues, especially online. In this regard, it was interesting to see that conversion was up over 20% on the year but sales only grew by 9%. This performance is undoubtedly driven by ongoing uncertainty around Brexit and looming interest rate rises, feeding customer caution. 

“The result is that people keep spending on basics, essentials and discounts in the mainstream, but stop shopping for ‘inspiration’ or at higher price points, both of which lead to a decrease in conversion. This kind of caution is usually seen impacting categories like electricals and gifting which declined at -15% and -27% on the year respectively. That said, this time last year was also pretty strong for online as the horrendous weather kept people indoors, so any overall growth isn’t all doom and gloom we hope?

Source : IMRG Capgemini 

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20 March 2019

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