Ecommerce sales grew at the slowest rate on record in January as retailers battle the ongoing cost-of-living crisis and rising inflation.

Online shopping in 2021

The rate of online retail growth fell by 24% year on year last month, according to the IMRG Capgemini Online Retail Index. This is the lowest rate of growth ever recorded by the index since tracking began 22 years ago.

January 2022’s figures faced tough comparables from January 2021 when online retail sales soared by 62% while the UK was in lockdown and ‘non-essential’ retail remained shut.

The year ended with a total growth of 2.7% compared with the previous year, which was also the lowest annual growth rate ever.

Average spend rose to £115 compared with £106 in December. This 24% rise marked the first increase in average spend since August 2021.

Fashion recorded the highest rate of growth online in January, with clothing sales up 5.4% year on year and womenswear performing particularly strongly. 

 

Skincare struggled to maintain the momentum recorded in January 2020, with online growth down 48%, while demand for makeup declined by 46%. Electricals also recorded a slowdown, with growth decreasing by 37%.

IMRG strategy and insight director Andy Mulcahy said: “The first quarter of 2021 had a severe lockdown in place, which drove huge online growth, so the year-on-year comparisons for the early months in 2022 are going to be harshly negative as a consequence.

“This can make it seem like online sales are in freefall, whereas actually it is just a natural rationalisation of the 50-60% increases we saw this time last year.” 

Capgemini senior manager Lucy Gibbs added: “The drop in orders this month is greater than revenue as ABV has increased by 24%. This could be an early indicator of increased prices, reflecting the ongoing supply chain disruption and underlying cost challenges.

“The GfK Major Purchase Index has also fallen four points in January as economic pressures add to consumer concerns. Capturing share of wallet among increasing bills and also pent-up demand for travel, events and eating out will continue to prove to be the focus as we navigate 2022.”

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