Online retail reaches all-time low

E-commerce growth rates plummeted in January

Web retail growth rates have plunged to their lowest level on record, according to latest research from industry body the Interactive Media in Retail Group (IMRG).

Like-for-like growth for online retailers increased by a meagre five per cent from January 2009 to January 2010, which corresponds to total spending of £4.3bn through the channel.

By comparison, online retailers had a bumper Christmas, with spending reaching more than £5.4bn in December – an increase of 17 per cent from the previous year and up 3.8 per cent from November.

“While annual growth for e-retail was slow in January, we should factor in the fact that December was a very strong month for the industry,” said Chris Webster, vice president at Capgemini’s retail consulting and technology practice.

“Last January, e-retailers’ sales were buoyed up by heavy discounting and promotions that were necessary to sell stock left over from poor Christmas trading resulting from the impact of the recent move into recession,” said Webster.

Despite noting that the results are in line with the usual seasonal trend of sales slowing after the festive season, the study adds that the decline is greater than in recent years.

According to IMRG, the decline in sales was much tougher on multi-channel retailers, where sales declined by 27 per cent over the period, than for pure-play online firms, which suffered a reduction in sales of 14 per cent.