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February 15, 2022

Fashion shines despite worst recorded growth for UK January online retail sales

The UK online retail market experienced the worst rate of growth ever at -24.4%, in January 2022, however, at a category level, fashion saw the highest rate of growth with clothing up 5.4% year-on-year.

By Laura Husband

The UK online retail market experienced the lowest rate of online growth ever recorded in its 22 years of tracking in January 2022, but at a category level fashion showed positive results with womenswear up 25.2%, menswear up 16.0% and footwear up 19.4%.

The overall -24.4% of year-on-year growth is said to fall well below the three, six and 12-month averages of -16.4%, -13.7% and -2.8% respectively, according to the latest figures from the IMRG Capgemini Online Retail Index, which tracks the online sales performance of over 200 retailers.

Last month, the index revealed that 2021 ended on a +2.7% growth in the market which was the lowest annual growth rate ever, so January 2022 has continued this trend with retailers competing against a steep growth rate of +61.8% in January 2021. It should be noted the UK was in a Covid lockdown in January 2021, which led to online channels experiencing a significant boom, whereas in January 2022 shoppers could choose between shopping online or in-store.

The average basket value did go up in January 2022 to GBP115 (US$155.84), compared to it being GBP106 in December 2021. The analysts at IMRG and Capgemini highlight in the first half of 2021, the average basket value saw huge increases, but it had been falling since August so January 2022 is the first month where it has started to go back up again. The average spend was also up over GBP20 compared to January 2021.

IMRG strategy and insights director Andy Mulcahy explains: “The first quarter of 2021 had a severe lockdown in place which drove huge online growth, so the year-on-year comparisons for the early months in 2022 are going to be harshly negative as a consequence. This can make it seem like online sales are in freefall, whereas actually it is just a natural rationalisation of the 50-60% increases we saw this time last year.” 

Capgemini senior manager and retail lead for analytics and AI, Lucy Gibbs adds that January was a mixed story for retail.

She says: “Our Online Index reported the largest YoY fall in sales ever, and the high street claimed the opposite. This is due to the now familiar Yin Yang effect on YoY revenues when comparing to last year’s lockdown store closures. As we emerge from the pandemic, the annual results will start to normalise and 2022 will hopefully bring a much more stable trading period, however the outlook still remains uncertain as we realise the fall out of economic and logistical challenges from the last two years.”

Gibbs also highlights the drop in orders this month is greater than revenue as average basket value increased by 24%. She suggests this could be an early indicator of increased prices, reflecting the ongoing supply chain disruption and underlying cost challenges. 

She says: “The major purchase index has also fallen four points (GSK) in January, as economic pressures add to consumer concerns. Capturing share of wallet amongst increasing bills and also pent-up demand for travel, events and eating out will continue to prove to be the focus as we navigate 2022.”

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