The year-on-year dip in online retail sales marks the 17^th successive month of negative growth recorded by IMRG and Capgemini.

The index which tracks online sales for 200 retailers, also found that online sales in August were down 6.2% compared with July.

Clothing was the only category to show positive year-on-year growth in online retail sales (+2.8%), while garden (-24.5%), and beers, wines and spirits (-20.6%) saw the sharpest declines.

Andy Mulcahy, strategy and insight director at IMRG, said: “It’s been a difficult summer for online retail, with many retailers apprehensive about how performance is going to be over peak trading. The hope is that the energy cap announcement will do something to boost shopper confidence a bit before we get into November, but even then, the omens are not good.

“Usually, the amount of money spent online increases and decreases interchangeably in line with activity retailers are undertaking, but across July and August we recorded five weeks of decline, which is rare.”

Simon Binge, commerce senior manager, customer transformation at Capgemini, added: “As we come to the end of a largely disappointing summer from a growth perspective, the focus turns to a critical peak trading period. We can see from the second quarter that retailers are already being cautious with promotions, with only 33% of sales being generated by promotional activity or discounted price, vs 42% during the same period last year. With this in mind, retailers will need to explore other opportunities for increasing orders and basket value outside of deep discounts.”

Retail sales volumes overall decreased by 1.6% in August compared with July, according to ONS data published on Friday ( 16^th September), continuing a downward trend since summer 2021. All main sectors (food stores, non-food stores, non-store retailing and fuel) fell during the month of August.

The proportion of retail sales taking place online fell to 25.7% in August from 26.3% in July, however, it continues to remain significantly above pre-coronavirus levels ( 19.8% in February 2020 ), according to the ONS. 

Commenting on the August ONS retail figures, Silvia Rindone, UK&I Retail Lead at EY, said: “It is critical that retailers review their pricing strategy – it’s now no longer a choice but essential to their long-term survival. Many are already doing this by introducing value orientated ranges to capture consumers who are trading down, but still want a compelling customer proposition. Valuable customer insight will also enable them to make decisions about range rationalisation and product delisting to create efficiencies.

“Retailers need to consider the impact of wage inflation and how this is absorbed in their pricing strategies. Government financial support for the spiralling cost of living crisis this autumn may help temper the impact of weakening consumer confidence and offer consumers some much-needed breathing space in the run up to Christmas, but overall demand is still likely to be dampened.”