The UK online retail market experienced the lowest rate of growth in 22 years in 2021, with online revenue finishing up +2.7% YoY, according to the latest figures from the IMRG Capgemini Online Retail Index, which tracks the online sales performance of over 200 retailers.
Following huge growth in 2020, when lockdowns pushed online retail revenue up +35% - a seven-fold YoY increase – the very high comparison meant most of the growth in 2021 was actually negative. This can be seen in the three- and six-month averages, which were -13% and -11% respectively. Q1 2021 was up +60%, while the other three quarters were down -9% collectively.
While this makes the performance of the online retail market sound poor, indexing 2021 against 2019 gives a very different picture, states IMRG and Capgemini. When analysed through this lens, the overall market was up +39%.
From a monthly perspective, December continued the negative trajectory for online sales in 2021, at -6.5%. However, this performance was far greater than in November, which saw online sales face a sharper decline than expected, at just under -20%. December’s rate was the smallest decline since growth went into negative territory in May 2021, possibly due to sales being buoyed by concerns over an impending lockdown in December and high numbers having to isolate at home.
Andy Mulcahy, strategy and insight director, IMRG, says: “2020 was the most disruptive year that most people in business today have ever experienced. 2021 started out much the same, but as the year unfolded some sense of normality returned, although all these sudden shifts, jolts and lockdowns made understanding what was actually going on very difficult – the 2019 comparisons are testament to that.
“Online has been a major beneficiary of the pandemic, no question about that, and many retailers have seen their online revenues hit heights they never could have imagined two years ago. But 2022 looks set to be a year defined by inflation, the cost of living crisis and a general increase in the costs of doing business. The competition is more intense now, so gaining and keeping hold of customers against that challenging backdrop is going to require a lot of focus.”
