Ecommerce’s sharp climb masks retail woe

2020 sees worst annual change in retailers' performance despite strong online sales growth

UK online sales growth remained solid throughout December, coming in at +37% Year-on-Year (YoY) for the month and driving the annual figure to a staggering 13-year high. That’s according to the latest IMRG Capgemini Online Retail Index, which tracks the online sales performance of over 200 retailers.

Closing a turbulent year, which was underscored by high street closures and massive restrictions on the consumer way of life, 2020 brought online retail to the fore like never before – explaining why the full year growth figure of +36% (YoY) significantly outperformed the start-of-year prediction of +7.8% (YoY).

The strength of online retail contrasts particularly strongly with data released from the British Retail Consortium (BRC) which stated that December continued the trend towards what the BBC reported was retailers’ “worst annual sales performance on record”. The BRC stated that there had been an overall fall of 0.3% which was the worst annual change since 1995. The headlines revealing BRC’s findings are almost a carbon copy of those issued in January 2020, which also saw the worst retail conditions for 25 years.

As the UK navigated a series of tiered lockdowns, online retail sales in December defied forecasts of a poor Christmas trading period. With sales starting early and Christmas travel plans halted, online shopping continued the momentum it had built throughout the quarter – with sales up 37.6%, across the three months. This was largely driven by November’s peak performance of +39% YoY and the Black Friday sales period.

Online sales do show a glimmer of encouragement but it’s important to note that ecommerce as a proportion of total sales is traditionally quite low – 19% in February 2020 rising to a peak of 36% at the peak of the pandemic.

Lucy Gibbs, Managing Consultant – Retail Insight, Capgemini, states: “Learnings from 2020 will be crucial as we navigate the uncertainties this year and a sense of a new baseline will take a while to be established. Retailers best set to ride out the storm are those with a strong online presence and the ability to remain nimble, using demand sensing to react to the changing landscape and adapt to surges both instore and online, combined with a readiness to take on opportunities as they come in 2021.”

Featured image: Ilyas Tayfun Salci / Shutterstock.com

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