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Lowest ever monthly growth for online retail tops of turbulent year

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UK online retail sales growth hit an all-time low of just 3.6% growth year-on-year in December, marking the end to what was a year or ups and downs.

According to the Capgemini IMRG eRetail Sales Index, the retail sector experienced a tough Christmas trading period to end a difficult second half of 2018.

Sales growth dropped to 8% year-on-year (YoY) in H2 in comparison with a 16% YoY growth in H1.

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Online retail sales were up 12% YoY in 2018, a figure expected to be even lower next year with a predicted growth of 9%.

Online retail sales across the whole of 2018 were still up on the start-of-the-year forecast of 9%.

However, the poor performance across H2 and December in particular, is evidence of low shopper confidence in the current climate, researchers said.

December’s growth rate of 4% YoY the lowest seen across the whole of 2018, and continued a declining trend, falling below the final quarter 7%, second half 8% and 12 month 12% averages respectively.

Andy Mulcahy, strategy and insight director at IMRG, commented: “The first half of 2018 was actually very strong for online retailers, it resisted and arguably benefitted from the tough climate that impacted trade for store retail.

“It is only the second half of the year where the suppressed confidence and spend, evident in so many other sectors, has spread to online retail; the macro-economic situation must be exerting pressure here, particularly with Brexit now entering its crunch period in Q1 2019.”

He continued: “If there had not been so much uncertainty and shopper confidence had not been so negatively impacted toward the end of the year, it seems a reasonable bet that online retail sales growth could have been much stronger than 11.8% for 2018.

“If Brexit can be resolved so that a course, whatever that may be, is agreed and pursued, it may help to build shopper confidence again with online likely to be the main beneficiary from a retail perspective.”

He concluded: “However, if 2019 proves to be a year of continuing uncertainty, with repeated delays and political instability causing market disruption, it may prove to be a tough year for many businesses to navigate – as we found out in late 2018, online is not immune from that.”

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Joe Peskett

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