UK online retail sales were up 10.2 per cent compared to last year, according to the latest figures from the IMRG Capgemini e-Retail Sales Index. This was the lowest growth rate for the index since October 2015 (8.7 per cent), with the surprise announcement of the general election and rising inflation likely to have been key influencing factors.
Several online retail sectors saw particularly low sales growth rates, most notably clothing where growth of 7.6 per cent was the lowest recorded for the month of May in the history of the Index. Sales growth for the gifts sector (5.5 per cent) was also at its lowest rate for May since 2009, while electricals experienced a decline in growth at minus 8.6 per cent.
This trend revealed itself in the results from April, the months preceding an election tends to produce a lower rate of growth than the equivalent months in non-election years. Rising costs may also be having an impact, with the latest ONS data showing that inflation grew to 2.9 per cent in May. This will in part be due to retailers needing to pass on the higher costs of buying in products to shoppers.
Sales growth through tablet devices also recorded a record low in May at minus 4.9 per cent year-on-year, which is the lowest rate since IMRG and Capgemini started tracking this dataset in 2013. This is likely in large part due to consumers increasingly using smartphone devices for shopping activity where they would previously have used tablets. On the plus side, sales growth through smartphones was up by 46.2 per cent.
Growth luckily rises again soon afterward the election – even in July 2016, the month after the Brexit vote and all the uncertainty that came with it, sales were up 8.6 per cent. The issue this time is that the UK now has a hung parliament, which leaves all political options still available, including the potential for yet another general election soon. 2017 is certainly turning out to be a very challenging year for retailers to navigate.