The worst year of growth for the online retail channel

The UK online retail market saw the slowest growth rate in 22 years of tracking in 2021.

Figures from the IMRG Capgemini Online Retail Index show that online revenue last year ended up 2.7% year-on-year compared to 2020.

Following significant growth in 2020, when lockdowns pushed online retail revenue up by 35% – a sevenfold increase from the rate in 2019 – the very high comparison meant that most of the growth in 2021 was actually negative. This can be seen in the 3 and 6 month averages, which are down 13% and 11% respectively. The first quarter of 2021 was up 60%, while the other three quarters collectively were down 9%.

While this makes the online retail market perform poorly, the indexing of 2021 versus 2019 shows a different picture. When analyzed through this lens, the overall market grew by 39% and the impact of the pandemic is most clearly visible in some of the IMRG and Capgemini categories.

For example, electricity was down 14% in December and only achieved 3% growth for all of 2021 compared to 2020; but when you compare 2021 to 2019, the growth was actually 100%. Meanwhile, apparel – which grew just 1% in 2020 – is up 20% from 2019, so retailers in this category have done pretty well, but not quite. to the same extent as some other categories.

From a monthly perspective, December continued the negative trajectory of online sales in 2021 with a decline of 6.5%. However, this performance is well above that of November, which saw online sales face a sharper decline than expected, down 20%. December’s rate was the smallest decline since growth entered negative territory in May 2021, possibly due to selling buoyed by concerns about an impending lockdown in December and high numbers of people having to self-isolate at her’s.

Andy Mulcahy, Director of Strategy and Insight at IMRG, said: “2020 has been the most disruptive year most business people have ever seen today. 2021 started off much the same, but as the year progressed, some sense of normalcy returned, although all of these sudden changes, jolts and blockages made it very difficult to understand what was really going on; the 2019 comparisons bear this out.

“Online has been a major beneficiary of the pandemic, there is no doubt, and many retailers have seen their online revenues soar to heights they could never have imagined two years ago. But 2022 is expected to be a year marked by inflation, the cost of living crisis and a general increase in the cost of doing business. The competition is more intense now, so winning and keeping customers in this tough environment is going to take a lot of focus.

Lucy Gibbs, Senior Manager, Retail lead for Analytics & AI at Capgemini, added: “The turbulence of the past two years has left its mark through the acceleration of online growth, but has also revealed areas of weakness for retailers, driving the need for operational resilience. and agility. For the first quarter, we will likely 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 in a challenging economic outlook.

“This year we saw the value of the basket increase significantly throughout the first half of the year, where spending continued to be diverted from usual spending patterns, but fell in the second half with the opening trips; It will be interesting to see which recent spending behaviors quickly return as competition for spending share increases, and which others will remain; the increased presence of digital experiences, the convenience of delivery, the flexibility to work in different locations will all influence the future of retail. »

Anne G. Cash