Online retail recorded its worst January sales growth - up 7 per cent year-on-year - in three years last month, as the industry’s poor recent sales performance continued into the New Year.

The latest IMRG Capgemini eRetail Sales Index showed that the month provided little relief to retailers on the back of December’s all-time low sales growth, as it recorded just over half the growth figure achieved during January last year (13.9 per cent).

January growth was actually marginally above the three-month average of 6.3 per cent year-on-year, but that was largely due to December’s record-low performance. When looking at the six and 12-month averages, January fell below the growth rates of 7.9 and 11.2 per cent respectively.

Health and beauty continued to resist the struggles of the overall index, enjoying a 8.1 per cent year-on-year growth in January. However, it was a bleaker month for gifts and electricals, which recorded falls of 25.8 per cent and 19.1 per cent respectively.

Andy Mulcahy, strategy and insight director at IMRG, said: “2019 could well prove to be a very challenging year, and the January growth was a slight improvement on the recent difficult trading conditions.

“The discounting that has been rife since all the way back in July continued into January as expected due to post-Christmas clearance – the challenge for retailers now is how to ease off the reliance on discounting for driving sales,” he continued. “As we’ve moved into February, many sites have either switched off discounting or lessened the prominence of such offers, so it’s now a matter of holding nerve.”

Bhavesh Unadkat, principal consultant in retail customer engagement at Capgemini, added: “The cautious start to the year is unsurprising given that pressures on the retail sector remain high as a result of further store closure announcements, continued low consumer confidence and economic uncertainty as we hold our breath, and our spending, ahead of further news on how the UK will exit the EU.”

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