The latest sector report for April has delivered a concerning message for online retailers in the UK, sparking speculations that the digital boom may be losing momentum. The IMRG Capgemini Online Retail Index, which was unveiled on Tuesday, paints a picture of a struggling sector that has yet to fully recover to pre-pandemic levels, with no significant growth in online sales. However, amid the gloom, there is a glimmer of hope in the fashion category, which managed to achieve a 4.2% year-on-year growth in April. Although this figure falls short of the impressive 51.4% growth witnessed in April 2021, it is still viewed as a solid performance.

In stark contrast, beauty sales, which had demonstrated exceptional strength over the past couple of years, experienced a sharp decline of 27% year-on-year in April. This downward trajectory has been evident for a few months now and is cause for concern. Furthermore, the index that tracks online sales performance for over 200 retailers revealed that the weekly results in April displayed negative growth when compared to the same period the previous year.

Andy Mulcahy, the strategy and insight director for IMRG, expresses his belief that the lackluster performance signals the potential end of the era of rapid online sales growth. He commented, “After two years of substantial volume increases online, it would seem that growth is now over.” Notably, this month is the first in two years that the index growth is unaffected by comparisons with lockdown periods, emphasizing the challenges faced by the industry.

Nevertheless, in a somewhat more positive note, the month-on-month growth in April surpassed expectations with a 3.8% increase. The average basket volume also reached a record-breaking high of £146, surpassing the previous pandemic peak achieved in August 2021. Lucy Gibbs, senior manager at Capgemini, points out that certain categories such as home and garden and health and beauty are still performing admirably, exceeding expectations despite the negative year-on-year growth seen in April. Clothing sales are also in line with expectations, hinting at a recovery after being severely impacted by the pandemic.

The overall report paints a picture of a potential decline in the digital boom for UK e-tailers. While the fashion category continues to display relative resilience, the beauty sector is grappling with diminishing sales. The industry as a whole is struggling to regain its pre-pandemic stride, foreshadowing a challenging road ahead. However, there are still categories that defy the odds, exhibiting resilience and outperforming expectations, thereby offering a glimmer of hope for a possible recovery in the future.

Useful Links:

1. BBC News: UK online retailers face challenging times as growth stalls
2. Retail Gazette: COVID-19 effect on e-commerce starts to wane with UK online sales remaining stagnant