UK online retail was tough in May but fashion proved strong

Online UK retail continued to struggle last month as comparisons with the boom of the pandemic and immediate-post-pandemic period remained tough. But fashion stayed strong and was described as a category “making up for lost time”.

It’s interesting that the latest IMRG Capgemini Online Retail Index (which tracks the online sales performance of over 200 retailers) showed sales falling but some surprising results. As mentioned, fashion did well and the one price category we’d expect to benefit actually declined, with discounters dropping in double-digits. Luxury also dropped but by a smaller percentage, while the mid-market — which is seen as the most likely price level to suffer in tough economic times — actually saw growth.

Budget retailer sales plunged by 15% last month with luxury retailers down 3.6%. Mid-market retailers were up 0.5%.

Overall, e-tail sales fell 8.7% year-on-year and month-on-month, they were also down, albeit by only 0.6% against April. However, the longer-term trend is that May sales are usually higher than those in April. 

The Average Basket Value (ABV) reached a new record high of £151, up £6 on April’s previous peak. It shows just how big an impact inflation is having, but could also be reflective of customers ordering multiple items at once in order to avoid repeat delivery fees, as well as a general preference for higher-quality items in order to avoid having to buy again in the near future. The report said website traffic was also up 8% on the year, though retailers reported “lengthy purchase cycles as consumers sit in the consideration stage for longer”.

The index showed that overall trading conditions continued to be very tough, and in the first week of the month, the performance was particularly bad with a 10.9% fall against May 2021. But spending improved as the month wore on, and in week three it almost reached positive territory at only a 0.3% drop. 

This “may have been a Jubilee boost — with people purchasing patriotic clothing and other items in advance of the bank holiday — without that, performance might have been even worse”, the report said.

Of course, not everyone was buying clothing emblazoned with flags or pictures of the Queen, but the clothing category in general was strong with a 14% sales rise. This divided down into an 18% jump for womenswear and a 12% rise for menswear. 

But health and beauty did much worse with a massive 28% drop. This is perhaps reflective of shoppers doing more of their spending in physical stores now. A year ago, shops may have been open but consumers remained nervous about going into potentially crowded retail locations. 

Andy Mulcahy, Strategy and Insight Director, IMRG said: “There’s no dressing it up, May’s performance was pretty awful online. April’s results suggested growth might be flat, but it is clear now that the economic situation is having a deep impact on demand; if it wasn’t for the Jubilee, which produced a slightly better week than the others, the decline might have been double-digit against negative growth for the same month last year. The one bright area is clothing, where growth was strong this month against +13.5% in May 2021. It seems to be a category making up for lost time, following almost flat growth in 2020. [It] could be that it is now simply benefiting from the increased number of people shopping online, combined with a general sense among the UK public that the pandemic is over and they can go out as they please again.”