January online sales suggest ‘disappointing’ year ahead for online retail

Online sales in January were down 2.2% year-on-year, suggesting another difficult year lies ahead for e-commerce retailers.

According to IMRG Online Retail Index, total market online retail revenue was down by 2.2% year-on-year, presenting against the huge, lockdown-affected rate of -22.5% in January 2021.

IMRG tracks online sales for 200 retailers, revealing that growth in traffic to online retail sites was often positive during 2022, but that too has declined for several months in a row.

Retailers are struggling to entice their customers and convert sales at the same rate as before due to inflation and the cost-of-living crisis.

Many online clothing retailers may face reduced confidence in 2023 as the online category experienced a 4.5% decline in revenue against a modest growth of 9% for the same month in 2022. Footwear was the single positive-territory growth subcategory of clothing, which was up by 4.7%.

The health and beauty category was also down by 4%.

Andy Mulcahy, Strategy and Insight Director, IMRG: “These disappointing, though not entirely unexpected, revenue and conversion rate results are in line with IMRG’s 2023 forecast for online retail, which expects YoY declines in total market revenue growth (-3%), home & garden and electricals categories (both -5%), health and beauty (-4%), gifts (-7%), and no growth is predicted for clothing.

"Shopper confidence is the key however if there are any notable improvements in the economic situation we should see that conversion rate nudge up again as people feel a bit more secure in their financial situation, so can spend out on more discretionary purchases. From January’s results, however, it feels little way off yet.”

This follows the news that online fashion giant ASOS's sales dropped 3% in the four months ending 31 December. Total group revenue dropped to £1.34 billion, which it said was in line with expectations, with the UK dropping 8% (to £591.3m).