Online retail sales in the UK increased 8.1% year-on-year last month, the lowest November growth since 2011.
The latest Capgemini IMRG e-Retail Sales Index shows that November fell below the three- (8.3%), six- (10.5%) and 12-month (12.2%) sales growth averages, as the market experienced its lowest-ever growth for a Black Friday week.
IMRG said online retail was resilient to the struggles experienced on the high street during the first half of 2018, but is now being affected by the tough trading climate.
Andy Mulcahy, strategy and insight director at IMRG, said: “Black Friday was underwhelming from a revenue perspective this year, and there are multiple reasons why shopper spend may not have responded as well as may have been expected. There is economic and political [instability] potentially impacting shopper confidence, plus the possibility that people might be becoming fatigued with the event – a factor compounded by negative stories released in the run-up, such as those by Which?
“One thing that is clear from our research is that heavy discounting had been going on far in advance of Black Friday, which lessens retailers’ capacity for grabbing attention by going into Sale. Did the sheer scale of the discount rates suppress revenue? Or is the overall peak spend getting more evenly spread throughout the Christmas build-up this year, due to Black Friday falling so early in November before many people had been paid? It’s a very complicated story this year, but the duration and depth of discounting rates are likely to be very significant.”
Bhavesh Unadkat, principal consultant in retail customer engagement at Capgemini, added: “Despite high conversion this month where all weeks saw an increase in orders, the drop in average basket value has impacted the sales growth, suggesting that extended promotions have had an impact on revenue this year.
“The evolution of Black Friday has shaken up the Christmas sales landscape over the last decade. However, the discounting snowball effect may be losing momentum as retailers try to regain control and extend the demand across the festive period. We saw a mix of strategies from the retailers: from kick starting offers early in the health and beauty sector, compared to a number of high-profile retailers who made a stand and pulled out of Black Friday altogether to protect their margins and pricing strategy. December performance and end-of-year profits will be the true measure of who has gained and lost in the discounting game this year.”