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April 12, 2022

UK online sales tumble in March amid consumer uncertainty

UK online retail sales fell by more than a quarter in March compared to last year but demand for apparel remains strong with womenswear and menswear recording double-digit increases.

By Beth Wright

UK online retail sales fell 25.5% year-on-year, last month, which is to be expected when compared to March 2021’s growth of 57%. That is according to the latest IMRG Capgemini Online Retail Index, which tracks the online sales performance of over 200 retailers.

The decline in March marks a slight rise on February’s 26.5% fall.

At a category level, womenswear and menswear continue to exhibit positive growth (+20% and +14% respectively), whilst the rest of the categories show poor year-on-year changes – ranging from -2% in footwear to -44% in homeware and decorations.

Looking at the month-on-month picture, spending patterns appeared in line with expectations for this time of year, although this does belie a general sense amongst retailers that customer behaviour is becoming increasingly unpredictable – with some weeks weaker than expected and others stronger. Without the anomalous pandemic growth for comparison, next month’s data will reveal a clearer indication of what growth is really looking like.

Month-on-month growth has crept back into the positive – coming in at +5% versus a 7.7% decline in the previous month. This is exactly where it was in 2019 before the pandemic disrupted the metric.

Meanwhile, the average basket volume (ABV) has once again climbed by GBP15 (US$19.50), now standing at GBP136.

“While retailers are doing what they can to mitigate against price increases, we have already started to see the impact on certain products, such as electricals and the overall average value of a basket continues to trend up, 12% vs February.  Order volume has also dropped down to a new low of -42%, potentially indicating that purchases are already becoming more considered. Weathering this storm will require tuning in to consumer reactions, where value for money will be at the forefront of decision making,” Lucy Gibbs, senior manager, retail lead for analytics & AI, Capgemini, says.

Andy Mulcahy, strategy and insight director, IMRG: “The Index shows that online retail maintained a big dip (-25.5%) during March, but that is against huge growth last year so is not necessarily indicative of poor performance. However, many retailers are reporting volatile traffic and sales spikes to us, with very little consistency in when one retailer does well and another badly. Retailers also report having to employ strategies such as discounts and offers to stop sales dropping, so while the index isn’t tracking major fluctuations, behind the scenes things are more frenetic than they seem; there is consistency in the inconsistency.

“On another note, Black Friday 2022 is on 25 November, which we recently found out is the same day that England play the US in the World Cup. Retail has never faced the distraction of the biggest global sports event before in the lead-up to Christmas, especially on the most significant e-commerce day of the year, but that could be a big factor disrupting it.”

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