December caps standout 2020 for online retail sales but fashion suffers and footwear “hard hit”

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Following an impressive November performance, online retail sales growth in December remained high at +37% year-on-year.

The growth caps a “standout year in e-commerce,” with online retail sales for the full year +36% year-on-year – a 13-year high as it was the highest annual growth seen since 2007, according to the latest data from IMRG Capgemini Online Retail Index.

However, as social interactions dwindled throughout the year, poor December clothing sales of +3.2% year-on-year failed to boost the yearly figure of just +1.3%. This was down from 8.2% in 2019. Footwear was particularly hard hit, down -5% year-on-year in December and -10.8% overall in 2020.

Breaking down the results from a category perspective, the holiday period drove significant sales in electricals – up +116% year-on-year. As firmer restrictions were put in place and people continued to meet outside, gardening sales were also strong for December – up +165% year-on-year. These figures round-off an extremely successful year for both categories, with electrical sales up +90.8% and garden sales up +222.5%.

Other spending trends in December include the widening of the gap between multichannel and online only retailer performance – with the two groups recording figures of +52.4% and +11.4% respectively. The yearly results echoed this pattern, showing overall sales growth of +57% versus +9.1%.

Closing a turbulent year, which was underscored by high street closures and massive restrictions on the consumer way of life, 2020 brought online retail to the fore like never before.

As the UK navigated a series of tiered lockdowns, online retail sales in December defied forecasts of a poor Christmas trading period. With sales starting early and Christmas travel plans halted, online shopping continued the momentum it had built throughout the quarter – with sales up 37.6% across the three months. This was largely driven by November’s peak performance of +39% year-on-year and the Black Friday sales period.

Lucy Gibbs, managing consultant for Retail Insight at Capgemini, said: “Retail in 2020 has been fundamentally shaped by the pandemic, which caused disruption to consumer demand norms and a shift in focus to digital channels, reflected in the strongest online year-on-year growth in 13 years. December sales closed the year with continued double-digit growth, up +37%, amid mixed lockdown tiers across the UK. Throughout the year, multichannel retailers have driven a large amount of this growth due to the transfer of demand to online, up +57%.

“Interestingly, pure online retailers ended the year at +9.1% for 2020, compared to 9.8% last year, though the story remains split by the sector demand shift away from clothing and increasing in electricals, home and garden. We have also seen smaller retailers outperform the larger ones, perhaps due to the ability to be more agile in response to the changes.

Retailers best set to ride out the storm are those with a strong online presence and the ability to remain nimble, using demand sensing to react to the changing landscape and adapt to surges both instore and online, combined with a readiness to take on opportunities as they come in 2021.”

Andy Mulcahy, strategy and insight director at IMRG, added: “In 2020 things changed rapidly, and it makes predicting 2021 extremely difficult. We could end up with a year where significant pandemic disruption lasts for the first quarter, the first half, or most of the year, and shopper spend might divert strongly to experiences and holidays if things open up again. This might be a year where we have to adjust our understanding of what good looks like.”