UK online retailers struggle amid supply chain challenges
UK online retail sales fell by -9.3% YoY last month, which was only a small improvement on July’s -9.6%, according to research from IMRG and Capgemini.
August’s performance was well below the six (+2.25%) and 12 month (+21.37%) averages, but above the three month average of -10.53%.
Lucy Gibbs, Managing Consultant - Retail Lead for Analytics & AI, Capgemini, says: “Online sales growth continued on its negative trend this month.”
“Interestingly, this was mainly driven by a -7.3% drop for multi-channel retailers, with online only retailers actually recording a growth of 1.7% in August compared to July.”
“This could indicate that multi-channel retailers are focusing their efforts to get consumers into their shops again, given that British consumer confidence has reached pre-pandemic levels for the second month in a row according to GfK’s Consumer Confidence Index.”
Other factors that could be affecting online shopping volumes and driving down conversion rates, which have dropped 23% compared to last year, are recent supply chain challenges worldwide resulting in stock shortage and delayed delivery timelines, she adds.
Andy Mulcahy, Strategy and Insight Director, IMRG, comments: “For several months running now, the average basket value has been up significantly on the same periods last year, meaning people are spending more per transaction than was the case previously.”
“With conversion dropping, it suggests people are encountering out-of-stock items or not finding what they were looking for, but when they do find something in stock, they buy it without shopping around for a better price.”
He continues: “A lower reliance on discounting to drive sales is interesting in the build-up to Black Friday – the discounting event of the year.”
“It does seem highly likely that whatever a retailer’s plan for Black Friday stock was back in January, there will need to be some adaptation if they can’t get the right products in time to fit their campaign plans.”
“It could be a year where stock runs down quickly, so retailers will need to be conscious that they don’t overpromise and end up frustrating customers.”
