Online Retail Halts Growth
Capgemini IMRG’s latest e-Retail Sales Index shows that total online retail sales at the end of November have fallen below the three- (8.3%), six- (10.5%) and 12-month (12.2%) sales growth averages, marking the lowest-ever growth for the industry in seven years. During the first half of the year, IMRG claimed e-commerce businesses were overcoming the struggles faced on the high-street, however are not falling to the tough trading conditions.
Andy Mulcahy, strategy and insight director at IMRG, said: “Black Friday was underwhelming from a revenue perspective this year, and there are multiple reasons why shopper spend may not have responded as well as may have been expected. There is economic and political [instability] potentially impacting shopper confidence, plus the possibility that people might be becoming fatigued with the event – a factor compounded by negative stories released in the run-up, such as those by Which?”
He continued, “One thing that is clear from our research is that heavy discounting had been going on far in advance of Black Friday, which lessens retailers’ capacity for grabbing attention by going into Sale. Did the sheer scale of the discount rates suppress revenue? Or is the overall peak spend getting more evenly spread throughout the Christmas build-up this year, due to Black Friday falling so early in November before many people had been paid? It’s a very complicated story this year, but the duration and depth of discounting rates are likely to be very significant.”
The insight comes just days after online giant ASOS announced their online growth estimates would have to be lowered following the news that their sales in November were ‘significantly behind expectations’. As a result, sales growth for the full financial year to August 2019 is now anticipated to be around 15%, down from a predicted rise of 20-25%. EBIT margin expectations have also been revised from 4% down to 2% from 4%.
It’s not all bad, however; following a survey from GlobalData which analysed the buying patterns and behaviours of over 10,000 consumers, the worldwide analyst called for online retailers to prepare for a higher volume of orders in 2019 as ecommerce sales look to jump 27.3% over the next five years.
Emily Salter, retail analyst for GlobalData, said: “Clothing and footwear is the most-returned sector, which is unsurprising due to the importance of fit – especially for online pureplays, as customers do not have a chance to try items on or judge the quality of products. Females account for the majority of clothing and footwear returners – partly because they make up a higher proportion of online clothing and footwear shoppers, but also due to the numerous fits of female clothing.”