UK eCommerce in 2024: Struggles, Bright Spots, and Hopes for Recovery
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2023 Revenue Growth Overview
Monitoring the performance of a market can sometimes give easy-to-understand conclusions. Consider the below graph for example. It shows revenue growth for the eCommerce market in 2023 (blue line for the first half of the graph), then a three-pronged forecast for growth across 2024, which we set out at the start of the year. The yellow line shows the expected growth (i.e. what the trend lines suggest should happen), then there is an alternative that tracks what could happen if trading conditions are a bit more favourable (green line) and if they turn out to be a bit worse (red line).
(Image source: IMRG)
Actual Performance in 2024
The blue line into 2024 shows what has actually happened so far this year. So – it is pretty clear to see that it has been a torrid year for eCommerce in the UK. Not only has performance been below expectation, it has been consistently beneath even the lower estimate of trading conditions. Year-to-date (YTD – Jan-Apr 2024 vs Jan-Apr 2023 year-on-year uplift) the market is tracking down -4.7%; the lower estimate of performance would bring it in at -2% for the year as a whole. Speaking to retailers, this does tend to tally with their experience – the trading environment is just proving very, very tough at the moment.
Sector-Specific Performance
It's important to note that the poor performance for eCommerce has not been across the board; there are bright spots. Clothing, for example, is down -6.4% YTD against a forecast of -2%. Yet within the clothing category, footwear has had more weeks of positive growth in 2024 than negative. Meanwhile menswear has frequently recorded declines of -10% and more. At the other end of the scale though health & beauty is seeing strong growth online, with revenue up +8.9% YTD against a forecast of +7%. Fragrance in particular is driving that growth.
Potential for Turnaround
Does this mean then, with the exception of health & beauty, that eCommerce is guaranteed to have a poor year for growth in 2024?
Not necessarily. While it may now require a pretty serious turnaround in fortunes for growth to come in anywhere near the expected forecast (0%), it’s also far from certain that it will continue at the same very low growth rate we’ve seen so far this year. The forecast chart above showed growth split out by month, if we split it out by week we can see something slightly different happening.
Impact of Calendar Events on Growth
(Image source: IMRG)
The red box shows growth in 2024 so far. Some of the sharp declines are due to some key retail events moving forward a week in the calendar (Mothers’ Day, Easter, the mayday bank holiday also went back a week; these usually bring discounting campaigns in the lead-up) so the year-on-year figure is not a proper like-for-like. If you remove those skewed dips, the trajectory – from a very poor January – is toward the 0% base line. This graph includes the first two weeks of May, which were positive – that is the first time we have recorded two consecutive weeks of positive growth since April 2021. The sun coming out was likely a significant factor after a cold and wet April.
Looking Ahead: Summer Boosts?
This doesn’t mean that demand is suddenly exploding back to life again but, in the past 36 months, 34 of them have seen negative growth for eCommerce (the other two were flat rather than notable positive growth). At some point, the declines will reach a natural end; it can’t keep falling away forever, and it feels like we might be approaching that now.
Add in a Euro football tournament and an Olympics, and the potential for some feelgood events this summer may provide an additional boost to demand.
But let’s not get too ahead of ourselves…
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