Worst year ever: UK online retailers get reality check after bumper 2020
Ouch! The UK online retail market just experienced its lowest rate of growth in 22 years of tracking by industry association IMRG.
Online revenue in 2021 finished up +2.7% year-on-year against 2020, according to the IMRG Capgemini Online Retail Index, which tracks the online sales performance of over 200 retailers.
This followed huge growth in 2020, when Covid lockdowns pushed online retail revenue up +35%, a seven-fold increase on the rate from 2019. The very high comparison meant most of the growth in 2021 was actually negative.
This can be seen in the three and six month averages, which were -13% and -11% respectively. The first quarter of 2021 was up +60%, while the other three quarters were down -9% collectively.
Andy Mulcahy, Strategy and Insight Director, IMRG: “2020 was the most disruptive year that most people in business today have ever experienced.”
“2021 started out much the same, but as the year unfolded some sense of normality returned, although all these sudden shifts, jolts and lockdowns made understanding what was actually going on very difficult; the 2019 comparisons are testament to that.”
He adds: “Online has been a major beneficiary of the pandemic, no question about that, and many retailers have seen their online revenues hit heights they never could have imagined two years ago.”
“But 2022 looks set to be a year defined by inflation, the cost of living crisis and a general increase in the costs of doing business. The competition is more intense now, so gaining and keeping hold of customers against that challenging backdrop is going to require a lot of focus.”
Lucy Gibbs, Senior Manager, Retail lead for Analytics & AI, Capgemini, adds: “The turbulence of the last two years has left its mark through the acceleration of online growth but also exposed areas of weaknesses for retailers, driving the need for operational resilience and agility.”
“This year we saw basket values grow significantly throughout the first half of the year where spend continued to be diverted from usual spending patterns, however dropped away in the second half as travel opened up; “
“It will be interesting to see which of the recent spending behaviours will revert quickly as the competition for share of spend increases, and others that will stick; increased presence of digital experiences, delivery convenience, flexibility of working in different locations will all influence how future of retail will look.”
