Online’s worst ever year for growth was actually rather good, study reveals
Whilst the UK online retail market experienced its lowest rate of growth in 22 years of tracking, new findings reveal that retailers have seen their online revenues hit record levels.
According to the latest figures from the IMRG Capgemini Online Retail Index, which tracks the online sales performance of over 200 retailers, online revenue in 2021 finished up +2.7% year-on-year against 2020.
Whilst this may make the performance of the online retail market sound poor, indexing 2021 against 2019 gives a very different picture. When analysed through this lens, the overall market was up +39% and the impact of the COVID-19 pandemic can be seen most clearly in some of the categories IMRG and Capgemini track.
In the clothing category, growth was only up +1% when compared against 2020 but grew +20% against 2019.
Andy Mulcahy, Strategy and Insight Director, IMRG said: "2020 was the most disruptive year that most people in business today have ever experienced. 2021 started out much the same, but as the year unfolded some sense of normality returned, although all these sudden shifts, jolts and lockdowns made understanding what was actually going on very difficult; the 2019 comparisons are testament to that.
"Online has been a major beneficiary of the pandemic, no question about that, and many retailers have seen their online revenues hit heights they never could have imagined two years ago. But 2022 looks set to be a year defined by inflation, the cost of living crisis and a general increase in the costs of doing business. The competition is more intense now, so gaining and keeping hold of customers against that challenging backdrop is going to require a lot of focus."
From a monthly perspective, December continued the negative trajectory for online sales in 2021 with -6.5%. However, this performance was far greater than in November, which saw online sales face a sharper decline than expected with just under -20%. December’s rate was the smallest decline since growth went into negative territory in May 2021, possibly due to sales being buoyed by concerns over an impending lockdown in December and high numbers having to isolate at home.
Lucy Gibbs, Senior Manager, Retail lead for Analytics & AI,Capgemini added: “Despite the low year on year growth vs last year, 2021 has been another record year for online when compared to pre-pandemic sales. The turbulence of the last two years has left its mark through the acceleration of online growth but also exposed areas of weaknesses for retailers, driving the need for operational resilience and agility. For the first quarter next year we are likely to continue to see negative growth in the year on year comparison as we go through a full cycle since the first UK lockdown. However, while nothing is certain, 2022 will hopefully see a more stable period of trading, albeit against a challenging economic outlook.
"This year we saw basket values grow significantly throughout the first half of the year where spend continued to be diverted from usual spending patterns, however dropped away in the second half as travel opened up; It will be interesting to see which of the recent spending behaviours will revert quickly as the competition for share of spend increases, and others that will stick; increased presence of digital experiences, delivery convenience, flexibility of working in different locations will all influence how future of retail will look."
