Online year-on-year sales growth slows in July to lowest level for 18 months

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The latest figures from the IMRG Capgemini e-Retail Sales Index have revealed a slowdown in the performance of the online sales market, with year-on-year growth at its lowest level since January 2010. British shoppers spent 5.58bn online in July; 5% up on the previous month a modest growth which has been hampered by poor online sales in the travel sector.

The slowing growth comes as better weather saw more shoppers hitting retail parks and the high street rather than staying indoors to do their shopping. The negative growth in the travel sector is consistent with the industry at large, with many travel companies seeing bookings decline this year. The collapse of travel firm Holidays 4U compounded a poor summer's trading as online bookings failed to materialise at the expected rate. Further evidence of a poor month can be found in the electricals sector which declined 3% compared with the previous year, having grown 17% year-on-year in July 2010.

Overall, the slowing of online growth was counterbalanced by the high-street, which reported a 2.5% year-on-year sales increase in July* helped by a food and clothing sales boost.  Online, certain sectors did perform strongly such as Home & Garden, which increased 27% year-on-year - this is compared with slow growth last year of only 8%. The clothing sector continues to expand rapidly, seeing a 25% year-on-year rise as shoppers update their wardrobes for the summer season and take advantage of the sales.

Chris Webster, head of retail consulting and technology at Capgemini says: "The slowdown in July shows the internet is not immune in tough times. Successful retailers will need to expand into multichannel and continue to improve customer experience throughout the online shopping processes. Furthermore, with such a successful first half of 2011, it was a tall order for online sales to maintain such rapid growth."

Tina Spooner, Chief Information Officer at IMRG, comments: "While the Index performed ahead of expectation during the first six months of the year, a slowdown in e-retail growth during the second half was always going to be a possibility. Between July and December last year the Index recorded strong growth, with sales up 21% year-on-year, and therefore over the coming months sales may well be slower, having come from a stronger base last year. However, online retail continues to consistently deliver double-digit growth, despite the retail gloom on the high street.

"With budgets being squeezed and disposable incomes shrinking, it is evident that consumers are making more considered purchases, especially on higher-ticket items, by researching across multiple online channels in order to make their money go further."