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Retail Technology, Retail technology News

Online shoppers hold out for price cuts

Sunday January 3 2010

Confidence in Christmas deliveries and hopes for early promotions signal strong growth in December  

Confidence in Christmas deliveries and hopes for early promotions signal strong growth in December

 

The IMRG Capgemini e-Retail Sales Index reveals that British shoppers spent £5.3 billion online in November. Sales were up by a quarter (25%) compared to October, and by 11% compared to 2008. November saw typical seasonal growth in online sales, with retailers starting to experience the pre-Christmas surge from the first week in November, according to the online sales tracker.

 

Christmas shopping trends prioritises bargains

 

Despite sales increasing ahead of the festive season, it added that year-on-year growth slowed in 2009, in line with the maturing of the online retail industry over the last couple of years. This is also attributed to shoppers holding out for bargains, rather than reducing their online spend entirely.

 

The past two years have seen retailers putting in place seasonal price cuts and promotions in December rather than January, meaning that many consumers have chosen to delay their Christmas shopping this year.

 

Christmas falling on a Friday in 2009 may indicate that shoppers are allowing shorter delivery windows than usual, a sign of increasing confidence in retailers’ ability to deliver on time. Typically the first week in December is the ‘peak’ week for Christmas shopping online and there is some evidence that this may well be the case again in 2009.

 

Indeed, Carl Clump, chief executive of Retail Decisions (ReD), card fraud prevention and payment processing experts said: “We're witnessing a 17% rise in online retail sales through December, which shows how important the internet has become as part of our daily lives. We are also seeing online shoppers spending their Christmas money with the larger retailers, because they have confidence in the longevity of reputable brands."

 

Mike Petevinos, head of consulting for retail at Capgemini UK, added: “November’s results show a solid growth for online retail in the run up to Christmas. Given retailers’ perceptions that consumers are holding out for bargains, this would suggest a strong December for online. The challenge will be to ensure that value is at the forefront of the Christmas message, with carefully designed promotions becoming the norm across the sector. Inspiring confidence in late delivery windows could also become a differentiator for those that have got it right.”

 

Sector splits see gifts and accessories sales growth

 

The accessories and gifts sectors showed the strongest growth in November. Sales of gifts more than doubled (105% increase) compared to October, and rose by 56% compared to last year. Sales of accessories online rose by 114% month-on-month and 68% year-on-year, perhaps as shoppers with less money to spend on Christmas parties compared to previous years, spruced up existing outfits with new accessories.

 

Year-on-year growth in the clothing, footwear and accessories sector rose 14%, although this is approximately half the rate of November 2008, indicating that this sector is reaching maturity.

 

Tina Spooner, director of information at IMRG said: “It is encouraging to see continued growth in the e-retail market which is clearly an indication of consumers’ confidence in the online channel. We would expect this positive growth in online festive sales to continue during December as retailers seize the opportunity of targeting their customers with promotions and offers in the final shopping days in the run up to Christmas.

 

“With many online retailers offering last order dates for pre-Christmas delivery as late as 23rd December, with a few promising same day delivery on Christmas Eve, even last minute festive shoppers can avoid the high street crowds this year.”

 

Jonathon Brown, John Lewis Direct head of online selling, commented: "November was a very strong month for johnlewis.com with year on year out-performance seen across all key categories of Home, Electrical and Home Technology and Fashion. Overall the site was over 50% up year on year, with some stunning performances especially in Fashion (over 90% up on the year before), which is a testament to the focus we have given to this area over the past few months."