At the end of February, IMRG tracked the lowest Year on Year (YoY) UK growth ever recorded in the IMRG Capgemini index, for the second month on a row – not a great picture for online retail in UK. The figure came in at -27%, compared to January’s previously recording breaking growth of -24.4%. However, this figure may not be as bad as it seems, because this YoY decrease was against very high growth rates in 2021, at 60%. This was when the UK was in its third lockdown, so online retail in UK was booming.
As shown in the graph below, taken from IMRG’s Digital Dashboard, we can see a steep decline in the YoY revenue growth, due to UK retailers’ inability to match the growth rates of 2021. As we approach April, there is hope that growth will begin to level out again and show some relatively positive figures soon, as we move into being one year on from the end of the lockdowns.
% Revenue Growth March 2021 to February 2022
Source: IMRG Capgemini Digital Dashboard
Month on Month (MoM) growth was down -7.7%, which is now within the usual range between January and February. This suggests that whilst growth remains negative, there is somewhat of a return to normal spending, as the MoM figure ignores the anomalous data of the YoY measure (comparing ‘regular’ growth with extremely high figures from last year, making it appear lower than it may be).
The Average Basket Value (ABV) has risen for the first time, since it peaked in August 2021. In January 2022, it was £108, and is now at £124 for February, showing a £16 increase in average spend. As we can see, in the graph below, ABV reached its lowest for the last twelve months in December 2021 after rising consistently over the summer.
However, the conversion rate has continued to drop, from 2.83% in January, to 2.72% in February, the lowest it’s been for twelve months. This means that customers are browsing, but not purchasing as many items.
It's thought that rising inflation, and elevating geo-political issues are placing pressure on UK retailers and customers alike, creating tension on both ends of the product journey. It will be interesting to see what the next few months have in store for online retail, as the rising cost of living, and mounting global tensions take the headlines, instead of the pandemic. As we return to a pre-pandemic growth rate, what will the market look like for ecommerce retailers?