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UK fashion e-tail growth slows, m-commerce falls as pureplay stores have tough time

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today May 21, 2019
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We've become used to seeing UK online sales rising in double-digits but in April, Easter failed to provide an expected boost with online retail sales rising only 5.2% year-on-year, according to the latest IMRG Capgemini eRetail Sales Index. 


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And m-commerce, which has been a hugely dynamic growth area in the overall online retail segment, saw an unexpected 20.5% fall in April after several quarters of increased growth.

Just how bad April was can be seen from the fact that a year ago, the overall figure was up 12.5%. And this April's figure also fell behind the three-month average (+8.3%), the six-month figure (+7.6%) and the 12-month average (+9.8%).

So what went wrong? Well, given that fashion makes up a huge chunk of online retail sales, it's no surprise that any downturn in the fashion sector would dent activity. 

The report said that the clothing sector continued a sluggish performance with growth only in single-digits (+6.7%). Clothing was one of the biggest sufferers last month and continued a six-month run of slower growth. Its overall increase was dragged down by a fall in lingerie spend (-8.5%) and accessories (-2.6%).

But some categories didn't only see the growth slowing, they  actually went into decline. Gifts saw a really steep drop of 22% and following a 15-month run of very healthy growth, health and beauty also slumped to a 0.7% fall.

It was all a big disappointment after a first quarter in which growth had weakened but with some hope that Easter would provide an uplift. Yet with unexpectedly hot weather over the Easter holiday period, consumers clearly wanted to get out and about rather than sitting in front of their screens to shop.

M-COMMERCE SHOCK

As mentioned, m-commerce was so much weaker than expected but it has still been holding its own in recent periods. In Q1, it was up 12.4%, so that more-than-20% drop in April was a massive shock. And while multichannel retailers suffered, with an 8% fall in their m-commerce receipts, it was the pureplay firms that dropped the most with a staggering 39% decline.

Andy Mulcahy, strategy and insight director, IMRG, said: “2018 was a tough year for retail generally as the industry appears to be undergoing an accelerating period of transformation. Online sales were strong in the first half of the year, but growth rates dropped toward the end of the year culminating in subdued trading over the Black Friday and Christmas peak. 2019 has seen a continuation of those trends, with clothing sales having a particularly difficult time; growth for this category has been low single-digit for six consecutive months for the first time since we started tracking it.

“There seems to be little sign of imminent improvement in shopper confidence; retailers will now be hoping that the warmer weather forecast over the coming weeks may stimulate greater demand, especially for those selling seasonal fashion lines.”

But Bhavesh Unadkat, principal consultant in retail customer engagement, Capgemini, added: “Looking ahead, we are approaching a strong May-July 2018 performance to benchmark against given the royal wedding, football World Cup and good weather, leaving retailers with the feeling of having a ‘mountain to climb’ next month and beyond.”

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