Online retail sales see lowest ever growth in 2022 as December fails to deliver

UK online retail sales fell -10.5% year-on-year in 2022, a record low for growth, with December 2022 online sales down -12% on the previous year.

It caps by far the lowest growth ever recorded for a year and the first time it has been negative. The previous low was +2.7% year-on-year in 2021.

Clothing was the single main category to achieve positive growth for 2022 as a whole, at +2.5% year-on-year, with electricals down -18.1% and home and garden dropping -17.6%, according to the latest IMRG Online Retail Index, which tracks online sales for 200 retailers.

The only positive growth for December was found in the sub-categories, such as lingerie at +0.9% year-on-year, haircare at + 9.1%, and makeup at +8.3%, though they were not enough to push growth for their parent categories, as clothing was down -6.1% year-on-year in December, while health and beauty dipped -11.8% for the equivalent month in 2021.

Growth online for the Black Friday week turned out to be flat, though it was better than expected and out of sync with the low demand of the previous 10 months.

However, that turned out to be due to volume being pulled forward, as was evident from the week following it, as sales for the week commencing 27 November dropped  -7.3%, against a huge decline of -34% for the same week in 2021.

The postal strike and delivery disruption also saw a weak performance for the week commencing 18 December, as final delivery dates shifted earlier, with sales down by -4.7%, and unable to build on the -22.4% decline for the same period last year.

Andy Mulcahy, Strategy and Insight Director at IMRG, said: “Retail is a confidence game; if people feel they are comfortable with their finances and have some disposable income to play with every month, then retailers tend to see that reflected in general patterns of demand. Mid-2022, we revised our forecast range, making a decline of -10% the lowest estimate in our modelling, which is where 2023 came in. So, it really has been a poor year.

“The bright spot, however, is that traffic to retail sites has continued to grow even after the huge surges from the pandemic, so once the general economic malaise eases, retailers should be in a good place to benefit from the fact that people still like browsing and shopping for products. The issue is that many are expecting another tough year in 2023, with the first half, in particular, unlikely to provide much respite.”