Online retail sales in the UK saw another year-on-year (YoY) drop in July 2022 by 2.3% when compared to the same month last year, according to the Capgemini/IMRG online retail index.
While this is the seventh month in a row there has been a YoY drop in online sales, July matched June’s smaller drop after the first half of the year saw significant YoY declines.
Simon Binge, commerce senior manager of customer transformation at Capgemini, said: “As the pressure on their spend continues to mount, consumers are having to make tough choices with regards to their purchasing behaviour, and the July data suggests that seeking value for money is more important than ever.”
The beginning of 2022 has seen consistent drops in online shopping as the market adjusts to the surge in online shopping causes by Covid-19 lockdowns.
In January, there was a 24.4% YoY drop in online sales, followed by another 27% YoY decline in February, and a 25.5% drop in March.
Declines were less significant in the following months, with only a 12% YoY drop in April and an 8.7% YoY drop in May.
June was the first month of the year the drop was minimal at 2.3%, but while these declines in online sales figures have slow slowed, Andy Mulcahy, strategy and insight director at IMRG, claimed the cost-of-living crisis may make traditionally lucrative times for retail more difficult than usual.
He said: “It seems remarkable that it took the hottest day in British history and England actually winning a football tournament to produce only slightly negative growth – it does make you wonder what would need to happen for it to be positive.
“Black Friday/peak season trading looks like it might be very difficult this year, given the Bank of England has increased interest rates and inflation is expected to reach 13% by then.”
Customer behaviour has been greatly influenced by the Covid-19 pandemic, where lockdowns forced people to operate from their homes, pushing up the amount of online shopping consumers were doing.
As current government guidelines have eased pandemic rules, the cost-of-living crisis has now taken front and centre, having a significant impact on the public’s shopping behaviours.
But inflation is not the only reason cited for consumer’s behaviour in July 2022 – Capgemini and IMRG suggest the smaller drop in online sales was down to hot weather and the outcome of the UEFA European Women’s Championship, with the week of hot weather seeing a 5.8% growth in online shopping.
Cost of living increases have been reflected in average basket value (ABV) across 2022. While the ABV in July dropped by £5 month-on-month (MoM) to £140 after a £6 MoM drop to £145 in June, every month before saw a steady increase in the average amount spent per online shopping basket, peaking at £151 in May 2022 after starting the year at £115 in January.
Clothing and garden were the two retail categories which saw a positive YoY online sales growth in July, possibly driven by the UK heatwave, with clothing seeing a 11.9% increase and gardening goods a 3.3% growth.
Prior to the pandemic, online shopping was already predicted to become the predominant way for consumers to make purchases, with Capgemini predicting in 2019 more than half of consumers would be doing their food shopping online by 2021.
Many believe the pandemic’s shift to online will continue to affect consumer behaviour after the pandemic subsides, with O2 Business and Retail Economics finding that 44% of consumers don’t plan to return to their pre-pandemic ways.