Decline in Online Sales Observed in January, Following Strong Finale in Late 2019
In January 2020, the retail sector witnessed a blend of positive and negative trends, with consumers seeking value for money and remaining cautious as the year commenced. According to the IMRG Capgemini Online Retail Index, which monitors the online sales performance of over 200 retailers, the growth rate in online retail sales remained flat compared to a modest growth rate of +7% in January 2019, indicating the lowest growth for January in three years.
Offline retail sales presented a slightly different scenario. Beauty sales surged by +7.1%, though this was relatively subdued compared to its average growth of +23.3% in 2019. Clothing sales also saw a growth of +3.1%, while home sales increased by +6.1%. However, electricals sales plummeted to -17.7%, a significant decline from +11.9% in December 2019.
The subdued online retail sales growth can be attributed to consumers' cautious spending habits. Andy Mulcahy, the strategy and insight director at IMRG, noted, 'Consumers are seeking value for money and remaining cautious as we start the year.' This trend was further evident in the budget retailers' outperformance over mid-market players in the clothing and health and beauty sectors.
Despite the overall economic uncertainty, there was a rising demand for sustainable shopping among consumers. Lucy Gibbs, a managing consultant - Retail Insight at Capgemini, commented, 'There is a growing awareness and concern about the environmental impact of consumer choices, and this is driving a shift towards sustainable shopping.'
However, the job market in the retail sector took a hit in January 2020. Almost 10,000 jobs were reportedly lost within the retail sector, although no public record or credible source explicitly reports any company cutting more than 10,000 jobs specifically in the online retail sector.
The question raised by the strong growth in November and December 2019 was whether it represented a turnaround in demand or an anomaly, likely driven by discounting. As the year progresses, it remains to be seen whether the gradual increase in consumer confidence will be reflected in spending patterns. Consumers, it seems, are holding on to their purse strings tightly, at least for now.
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