Strong December caps 'standout' 2020 for online retail sales, but fashion, footwear struggled

By

Nigel TAYLOR

Published
Jan 12, 2021

2020 was truly the year to be a digital trader in the UK above any other. Boosted by a final flourish in December, overall online retail sales last year grew 36% on the previous year, blowing away a start-of-year prediction of 7.8%, according to the latest IMRG Capgemini Online Retail Index.

“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”, the report, which tracks the online sales performance of over 200 retailers, said.

UK online sales growth “remained solid” throughout December, coming in at +37% year-on-year for the month and driving that annual figure to a staggering 13-year high.

Online sales sales also drove 37.6% higher year-on-year across the final three months of 2020, largely driven by November’s peak performance of +39%, driven by the Black Friday sales period.

But those impressive overall gains don’t quite reflect what happened in the fashion and footwear digital arena. As social interactions dwindled throughout the year, “poor” December clothing sales rose just 3.2% year-on-year, failing to boost the yearly figure of just +1.3%. This was down from the 8.2% gain seen in 2019.

Footwear was particularly hard hit too, down 5% year-on-year in December and it was 10.8% down across 2020.

By comparison, the festive period drove significant sales in electricals – up 116% year-on-year. Meanwhile, as firmer restrictions were put in place and people continued to meet outside, gardening sales were also strong for December – up 165% against a year ago.

These figures round-off an extremely successful year for both categories, with electrical sales up 90.8% year-on-year and garden sales up 222.5%.

Other notable spending trends in December include the widening of the gap between multichannel and online-only retailer performance – with the two groups recording figures of (+52.4%) and (+11.4%) respectively. The yearly results echoed this pattern, showing overall sales growth of +57% vs +9.1%.

Lucy Gibbs, managing consultant - Retail Insight, Capgemini, said: “Throughout the year, multichannel retailers have driven a large amount of this growth due to the transfer of demand to online, up +57%”.

Interestingly, she noted: “We have also seen smaller retailers outperform the larger ones, perhaps due to the ability to be more agile in response to the changes”.

Gibbs added: “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 in-store and online, combined with a readiness to take on opportunities as they come in 2021.”

Andy Mulcahy, strategy and insight director, IMRG, also said following a rapidly-changing retail landscape in 2020 “makes predicting 2021 extremely difficult".

"We could end up with a year where significant pandemic disruption lasts for the first quarter, the first half, or most of the year; shopper spend might divert strongly to experiences and holidays if things open up again; the economic situation might lead to a squeeze on spend; the list of potential macro variables goes on".

He added: “As it is so uncertain, some datasets are going to look odd this year and we think putting a forecast out would not be useful. This might be a year where we have to adjust our understanding of what 'good' looks like.

"For example, while growth in Q1 will probably look similar to previous lockdown rates, from April in 2020 those rates were extremely high and will be hard to build upon. If a category was up +120% one month in 2020, recording a drop of -20% for that same month in 2021 might actually be considered a reasonable result”.