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Online retail market bucked economic trends with 14% growth in 2009, while online trade body predicts 13% more growth in 2010

Online retail market bucked economic trends with 14% growth in 2009, while online trade body predicts 13% more growth in 2010

 

New figures released today from the IMRG Capgemini e-Retail Sales Index show that UK shoppers spent £5.46 billion online in December – an equivalent of £88.93 for every person in the UK – 17% up on December 2008. Sales also rose by 3.8% compared to November 2009, demonstrating typical growth for the month of December.

 

The online trade body said the peak week for online Christmas shopping was the second week in December. This was one week later than in 2008, as a combination of November postal strikes; shoppers holding out for bargains; increased confidence in delivery services; and Christmas falling on a Friday delayed the annual spending spree.

 

A year of sustained e-retail growth

 

Year-on-year growth in the Index in 2009 was at average of 14%. In September of 2009, the growth rate of 7.6% was the lowest year-on-year growth rate in the history of the Index, perhaps attributed to warm weather and postal strikes taking place during this particular month.

 

Clothing mirrored the overall market throughout the year – this sector has driven the overall Index in 2009. Accessories, gifts, health and electricals performed less well throughout the year but peaked in November and December 2009.

 

Compared to December 2008, there was strong year-on-year growth in all sectors tracked in the Index. Sales of accessories, gifts, electricals, and health and beauty products saw particularly marked growth online compared to last Christmas.

 

Consumers looking to stock up on alcohol for Christmas celebrations turned to the internet for the best bargains, spending 25% more than in November. Although clothing saw low growth compared to November, shoppers spent 18% more compared to December 2008.

 

Multichannel players buck the retail trend

 

Jon Parry, principal retail consultant at Capgemini, said: “Once again, consumers have turned to the internet to do their Christmas shopping, with 17% growth year on year this December. An interesting shift during this festive period is the strength of the month-on-month performance for multichannel retailers (up 13%) versus their pure-play competitors (down 8%). This shows both the high value consumers place on a multichannel proposition, particularly when it comes to gift returns, and the trust advantage our High Street brands have if they can get their online proposition right.

 

“A key trend highlighted by our index analysis is the 25% drop in conversion rates from 2008 to 2009. This is a clear reflection of the increased traffic using the internet as a source of product information and recreation, accelerated by the increase in retail content on social network sites such as Facebook. This highlights the significant opportunity on the table for retailers to enhance their online customer experience.”

 

James Roper, chief executive of the Internet Measurement Research Group (IMRG), added: "The latest Index figures prove yet again that online shopping thrives on adversity. The sector managed to deliver strong double-digit growth in 2009 despite the economy being in recession, aggressive High Street competition, extreme weather and even postal strikes in the run-up to Christmas.

 

“2010 looks set to produce another year of strong results for e-retail, with demand expected to remain high as consumers habitually look online for best buys, and a pipeline of significant improvements emerge, including wider product range availability, even better websites and a greater choice of convenient and more reliable delivery options."

 

More decisive, loyal consumers

 

The growth levels for multichannel retailers and online only retailers diverged in December for the first time last year. The Index for online only retailers fell by 7.6%, whereas the Index for multichannel retailers rose by 13% month-on-month. This can be attributed to multichannel retailers (such as large department stores) offering guaranteed delivery for Christmas later in the month, it suggested.

 

Although following a downward trend throughout 2009, the average conversion rate for e-retailers rose slightly in December, with almost one in 20 visits to websites being translated into actual purchases. This was higher for online only retailers, who managed to convert an average of one in sixteen visits in December.

 

Jonathon Brown, John Lewis Direct head of online selling, said: “There were notable performances across johnlewis.com, however, a few to highlight were toys and sports as customers shopped for Christmas online as well as got ready for the January resolutions to get fit.

 

“It is worth noting that the launch of Clearance online (from Christmas Eve) saw johnlewis.com take over one order a minute in the first hour and continued to see strong sales throughout the festive period – we recorded our highest ever traffic day on the Boxing Day."