Online switch from clothes to electricals and gardening
Online sales of clothing suffered a poor performance last year compared with other categories that enjoyed blowout growth in an incredible year for the channel as Covid-19 reshaped the retail landscape.
The IMRG Capgemini Online Retail Index recorded online sales growth of 37% – a 13-year high – for 2020 compared with the previous year when it delivered its lowest ever rate of increase of a mere 5%. Within the headline numbers were diverging fortunes across categories as changing lifestyles brought about by Covid-19 dramatically affected shopping behaviour.
Electricals achieved 91% year-on-year growth compared with a fall of 14% in 2019 while home & garden increased 74% versus 8% previously, and health & beauty sales jumped 64% compared with 20% in 2019. In contrast, clothing managed year-on-year growth on only 1% versus 7% the previous year.
Clothing shopping no longer essential
Lucy Gibbs, managing consultant of retail insight at Capgemini, says: “It was only with the easing [of restrictions and stores reopening] in July that clothing went into positive for the first time in the year. It was seen as less of an essential item – with no nights out, no weddings, and no need for workwear – clothing retailers had to adapt their ranges with more focus on loungewear.”
The growth rates online also differed by the size of retailer with smaller players enjoying significantly greater uplifts over the course of the year. For instance, smaller operators (less than £10 million of sales) increased 225% around the Black Friday peak in October 2020, while medium (between £10 million and £100 million sales) and large (over £100 million) retailers both achieved a much lesser 40% peak level of growth.
“As demand increased online the large retailers struggled with availability and some customers diverted their business to the smaller stores. Also, the smaller ones are more agile to react to changes in demand,” suggests Gibbs.
Fulfilment stood up well
Overall the performance of retailers’ fulfilment operations across 2020 have been creditable, according to Bruce Fair, chief revenue officer at Metapack, who says the industry “coped really well” with the unplanned demand though March to June when sales spiked to levels exceeding Black Friday week of 2019, and also the 2020 Black Friday period when volumes increased 60-70% on the previous year.
Because of the second lockdown, and the associated store closures, the 2020 Black Friday promotion was elongated compared with previous years, with retailers beginning their activities three weeks before the actual Black Friday. In contrast, 2017 only involved promotions across the week of Black Friday itself, while 2018 started a week out, and in 2019 it began two weeks out.
Retailers handled these serious volume increases through adjusting their delivery propositions. “Retailers invested heavily in ship-from-store, including Holland & Barratt, and some moved to using Amazon as a shipping service in addition to traditional carriers. We see this growing in 2021. At the peak of 2020 retailers reduced delivery promises to consumers with the 3-5 day pushed out to 7-10 days. Lots also reduced their delivery options with next-day, time-slots, and weekend deliveries reduced to standard delivery only,” explains Fair.
Pure-plays no match for multi-channel
Last year also saw a particularly strong online performance from the multi-channel retailers versus their pure-play counterparts. Matthew Walsh, director of data and retail at IMRG, says as soon as the high street closed there was a “huge shift” in demand online and the multi-channel players benefited most, with 57% growth across the year, while pure-plays had a much more muted 9% growth level online.
Within the clothing category there was only a small shift in demand online as a result of stores closing and multi-channel retailers achieved growth of only 9% but even this was better than the performance of pure-plays that suffered a sales fall of 8% on 2019.
Meanwhile the multi-channel retailers within the home & garden category had a bumper year with growth of 87% as they seemed to benefit online even though many – including the DIY players like B&Q – were allowed to keep their stores open during lockdown. The pure-plays also had a strong period with a 27% increase.
Being part of the home & garden category (with the core focus on furniture) David Kohn, customer & e-commerce director at Heal’s, says the department store has enjoyed online sales growth through 2020 driven by increased traffic to its website and boosted levels of conversion.
Trends continuing into 2021
Although he was pessimistic about the prospects for 2021 Kohn is pleasantly surprised as there has so far been no sign of any deterioration in Heal’s metrics around traffic, conversion, digital marketing and the website.
“We’re increasing sales through periods when the stores are shut. We need the stores to be open again at some point but our highest ever company numbers in the week after Christmas came despite the stores being closed. We are still doing live chat and video from in-store [for customers online at home] though,” he says.
Kohn adds: “We keep trying to be pessimistic but the facts keep pushing us to be optimistic. Hopefully the trends will continue through 2021.”
Article by Glynn Davis
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