Monthly Heatmaps Report - February 2023

Week-over-week trends

Transactions in the US decreased in January but began to pick up in February. This was expected following the holiday season which spanned from October to December last year, resulting in a significant drop in transactions in January, with most categories experiencing consistent double-digit declines. Exceptions included: Food & Drink, Home & Garden and Pet Food & Supplies, which rebounded more quickly posting weekly gains in January. However, as February began, the winds shifted, with many categories starting to see growth again, some of which were almost certainly driven by Valentine’s Day. Even Electronics, which had significant drops in transactions during January saw the decline slow. Revenue for e-commerce mirrored the slow conversion trend in January, with week-over-week declines occurring from the last two weeks of December through most of January and most categories starting to post gains or at least holding flat the first week of February.

Year-over-year trends

E-commerce has improved from last year across a wide range of categories with six categories having higher transactions than in 2022, despite the observed month-over-month declines in January. Electronics was a notable category to see year-over-year growth since it had posted declines during the entirety of Q4. Food & Drink, Health, Sports and Toys & Games posted no growth in January which was consistent with their year-over-year performance before Christmas. These categories, along with Electronics, reported a similar trend of increased in-person shopping after the pandemic. 

Revenues showed consistent double-digit year-on-year growth in nearly half of the categories, including Home & Garden, Beauty & Cosmetics, Electronics and Pet Food & Supplies. However, Health and Toys & Games saw double-digit declines during this period. Finally, four categories in January consistently had an average order value growth that exceeded inflation for two or more weeks. Categories that had declines in transactions and revenues had higher average order values, implying that consumers spent more per order but bought less or less frequently. The Electronics and Beauty & Cosmetics categories had average order growth in early January, but the trend turned negative as the month progressed. However, this decline in average order value coincided with Electronics posting YoY revenue gains again, which may have convinced consumers to buy.

Week-over-week trends (for tables download the free report)

Grips noted two growth periods in UK e-commerce in the past 3 months: Cyber Week and January sales. Most categories showed transaction growth for two or more weeks in January through early February instilling optimism among online retailers amid the ongoing cost-of-living crisis. However, as the January sales period ended, transactions in almost all categories declined in February, which is one month later than the decline seen in the US. This is probably because January sales are less common in the US. 

Half of the categories showed similar revenue growth during the January sales period as observed during Cyber Week. Health and Fashion & Apparel categories, however, performed worse in the January sales possibly due to warmer weather. And Sports retailers experienced lower growth rates post-World Cup. Growth in revenue was less significant in January than during Cyber Week with Cyber Week posting stronger and sharper revenue growth week-over-week. 

Year-over-year trends (for tables download the free report)

Grips’ UK e-commerce analysis shows that despite the week-over-week growth in January, retailers were unable to get out of the rut and post better numbers than last year. In fact, the weak market observed in Q4 2022 continued into Q1 with most categories still seeing year-over-year declines in transactions and revenue even during the January discount period. Only Food & Drinks and Electronics had order values that matched or exceeded inflation. While some categories saw a slight uptick in order value, others experienced consistent double-digit declines, and four categories (Jewelry & Luxury Products, Beauty & Cosmetics, Health, and Sports) saw no growth during January. 

Week-over-week trends (for tables download the free report)

Similar to the trend observed in the UK during the January sales, Germany experienced an increase in week-over-week transactions in the latter half of the month. With the exception of Electronics, all categories exhibited transaction gains for one or more weeks in the past month. Electronics showed a consistent decline, albeit with a slowdown in the downward trend. The upcoming March report may bring some positive news for this category. Only two categories saw consistent double-digit transaction declines of more than one week, but both posted gains during other weeks mostly offsetting the drops. 

E-commerce revenue in Germany followed a similar pattern to transactions, with only two categories (Electronics and Jewelry & Luxury Products) not experiencing any revenue rebound in January and February. Home & Garden and Health categories saw revenue growth throughout January, and Food & Drink had two continuous weeks of revenue increases of more than 20 percent. However, the growth of January did not carry over to February, with all but one category (Beauty & Cosmetics) showing flat or declining growth, a sign that after the January sales, consumers need a break, even if it is Valentine’s Day. Beauty & Cosmetics, showed improved performance at the very end of January and stronger growth in February, similar to in the US. However, there was no January sales bump for Beauty.

Year-over-year trends (for tables download the free report)

Despite outperforming the UK, the German e-commerce market still faces economic challenges. Food & Drinks, Sports, Jewelry & Luxury Products and Health categories showed growth, with Food & Drinks posting nearly doubled year-over-year transactions. Four categories (Fashion & Apparel, Toys & Games, Electronics, and Home & Garden) saw notable and sustained transaction declines, likely driven by the return of in-person shopping and prioritized spending. 

Apart from Food & Drinks, Sports, and Jewelry & Luxury Products, most categories also saw year-over-year revenue declines. Health and Beauty & Cosmetics categories began strong in January but struggled in the final weeks. Only Jewelry & Luxury Products and Toys & Games had average order values outstripping the inflation rate of around nine percent. However, both categories had poor year-over-year comparisons. German retailers can take the glimmer of optimism that average order values did not drop as much as in the UK and US, with the highest drop being in the Food & Drinks category.