Online sales growth in the UK dropped to an all-time low of 3.6% in December 2018, capping a rollercoaster year for the digital sector.
Overall sales growth for 2018 was up 11.8% year on year, down from 12.1% in 2017, driven by a bumper first half of the year, the latest Capgemini IMRG eRetail Sales Index shows.
Menswear performed particularly well: sales grew 22% year on year, thanks to a tailored offer and growing consumer demand.
Shoppers were driven online by weather events including the “Beast from the East”, the royal wedding, the summer heatwave and England’s better-than-expected World Cup campaign, leading to a 16% growth in the first half of the year.
However, demand crumbled in the second half of the year, as consumer confidence drop as a result of uncertainty around Brexit and prominent high street collapses, including House of Fraser and HMV, spread concern to consumers.
Overall growth for the second half of 2018 was 8.4% year on year. Within this, retailers saw the lowest September growth rate – 7.9% year on year – since September 2014. In December, growth crumbled to 3.6% – the slowest rate since the index began 18 years ago.
In a turbulent second half of the year, retailers including Superdry, Footasylum and Bonmarché issued profit warnings, and Black Friday underperformed for retailers. Online sales grew 7.3% on Black Friday itself and 6.8% in the week from 22 to 29 October – a lower rate than expected.
“The first half of 2018 was actually very strong for online retailers – it resisted and arguably benefited from the tough climate that impacted trade for store retail,” said Andy Mulcahy, strategy and insight director at IMRG. “It is only the second half of the year where the suppressed confidence and spend, evident in so many other sectors, has spread to online retail. The macro-economic situation must be exerting pressure here, particularly with Brexit now entering its crunch period in the first quarter of 2019.”
For 2019, the index predict 9% total online retail growth for the year, although the figure was called “optimistic” by retailers at the report launch. The “calamitous possible impact” of a no-deal Brexit was a particular concern. Brexit uncertainties are expected to dent spend in the first half of the year, but the forecast predicts an uplift in the second half.