After a disappointing May, the latest IMRG Capgemini eRetail Sales Index revealed an 8.5% year-on-year (YOY) jump in online retail sales last month, thanks to great weather kick-starting summer spending.

Sales were up 5.1% on May; above the five-year average for June. May saw online sales suffer their worst growth on record, up just 1.9%, meaning June’s results represent the strongest growth so far this year, and are well ahead of the six-month, and 12-month rolling averages, which were  respectively -0.5%, +5.4%, +6.9%, respectively.

Multichannel was up 8.5% in the month and online only retailers saw growth of 8.1%. Whilst clothing topped the bill with the highest growth, online sales of home and garden products still recorded a 9.8% uplift. However, electricals were down 23% and gifts fell by 23.4%.

IMRG strategy and insight director Andy Mulcahy said: “The trading environment for online retail in the first half of the year has been tough; for the previous three months (March-May), growth was just 2.2%. June then can be interpreted as a bounce-back, particularly given it was building on strong growth of 16.1% in June 2018. However, the discounting has been heavy so the margins achieved may not be high – online clothing sales were up +15.7%, but the average basket value for clothing was down -25%. That doesn’t suggest shopper confidence is very high.

“It is the summer sales period now, so end-of-season sales campaigns are in full swing. The key now for retailers is whether they can come out of discounting and maintain a reasonable level of sales growth before we get too close to the Black Friday period. Otherwise we may be in for another difficult peak where the rates of discount are wider and deeper than many retailers would like.”

Capgemini principal consultant in retail customer engagement Bhavesh Unadkat added: “June had a positive sales performance this month, reporting highest YOY growth this year, however it is to be considered with a note of caution; consumer confidence is down 25% vs last year, and the overall performance is masked by weaker comparable in June 2018 and higher discounting activity, indicated by higher conversion rates and lower basket values.

The change of tune in June was also not enough to counter the overall quarter performance, and Q2 reported even slower growth than Q1 (+3.5% vs +7.5%), albeit up against a big Q2 2018. The sectors that where was affected considerably in the second quarter were garden (-45%), beer wine & spirits (-6%), and accessories (-11%), partly driven by the weather and bumper events driving positive and impulsive spending last year.  Only Clothing has bucked the trend (+11%), with a stronger performance in the second quarter, however the late timing could impact the profits for retailers.  The hint of optimism lies with the hope that performance picks up in the second half against weaker comparisons last year.”