June rise an anomaly as online retail sales slump to lowest ever July growth

Ecommerce Online Retail

June’s increase in online retail sales growth has been labelled an “anomaly” as growth in July slumped to its lowest ever level.

Accrording the latest IMRG Capgemini eRetail Sales Index, online retail sales grew by just 4.4% year on year (YoY) in July, and falling by -5.7% month on month.

Despite the hot weather and notable online shopping events like Amazon Prime Day, these figures represented the lowest ever July YoY increase, and came in well below the 3-month, 6-month, and 12-month rolling averages (respectively +4.9%, +4.9%, +6.5%). 

Clothing sales followed a similar pattern to the overall result, with positive growth of +4.5% failing to match June’s 2019 high of +15.7% or the five-year average of +8.6%.

After recording its strongest performance of the year in June (+31.2%), menswear saw a significant drop in growth to just +10.4%. Meanwhile, both accessories and womenswear were down (-13.3% and -8.7% respectively), and womenswear saw its average basket value decrease by a third compared to last year.

Andy Mulcahy, strategy and insight director, IMRG, said June’s growth was likely due to heavy discounting.“Online sales growth had been subdued throughout the first half of 2019, but in June there seemed to be a bit of a bounce-back that hinted toward growth picking up again,” he said.

“However, there is now evidence that the June performance was artificially inflated by heavy discounting to stimulate sales activity, and it seems likely that some of that volume was pulled forward from July.”

Mulcahy added: “There is usually a dip between June and July, but this year it was down -5.7%, a sharper decline than the five-year average of -1.1%. The clearest indication came from clothing, which recorded its strongest growth in over a year in June (+15.7%), but the average basket value (ABV) was down around 25%, suggesting that the rise was driven by discounting.

“In July the ABV held up for clothing but growth was just +4.5%, with shoppers being less responsive to their campaigns, while womenswear retailers were having to work very hard to drive sales – the ABV decreased by around a-third versus last year.”

Bhavesh Unadkat, principal consultant in retail customer engagement, Capgemini, said: “July disappoints after a better June performance, falling back to +4.4 vs last year which is just below the average performance for the year of +5.4%.  Over the last three months pure online retailers have fared better than multichannel players online, maintaining consistent growth above +8%.

“This compares to a much more volatile performance, jumping from -0.1% to +8% in May to June, and +4% in July, indicating that multichannel online sales are more sensitive to sales activity as consumers seek out the best deals.”