Total of £4.5 billion spent online during May means e-commerce reaches highest growth rate in two years
The latest results from the IMRG Capgemini e-Retail Sales Index show that total sales online increased by 22% in May compared to last year in the highest growth since June 2008. Sales, it said, were boosted by warm weather and the bank holiday weekends.
Shoppers spent £4.5 billion online during the month, equivalent to £73 for every person in the UK. The Index also showed a 3% increase in sales in May compared to April this year.
There was a 23% increase in alcohol sales compared to last year, as shoppers stocked up on booze ahead of the World Cup. This was fuelled by discounted prices being offered by many retailers. Sales of electrical goods also jumped by 13%, perhaps an indication of the anticipated surge in flat-screen TVs being sold to coincide with the tournament.
Sales of clothes online also rose considerably in May, with a 32% increase compared to last year, in line with the warmer temperatures, as well as the World Cup fuelling sales of sportswear ahead of the big England matches.
Spending cut concerns not evident
Chris Webster, vice president of retail consulting and technology for Capgemini, said: “Throughout the history of the Index, we have seen a noticeable rise in sales of certain goods whenever there is a major sports tournament on. This year’s World Cup is no exception, with online retail as a whole growing by the highest level in two years, and sectors such as clothing, alcohol and electricals rising especially rapidly.
"It’s good to see that consumers’ spirits haven’t been dampened by concerns over government spending cuts, and savvy retailers will have embraced the opportunity to draw in new customers with marketing and price incentives.”
Tina Spooner, director of information at e-commerce trade body IMRG, added: “With online sales growing at their highest rate in almost two years, this is good news for the e-retail industry. The fine weather in late May, together with the build up for the World Cup appears to have had a positive impact for e-retailers.
“Year to date, the UK e-retail market has grown 14%, which is in line with our predictions for this year. With recent research suggesting that over half of consumers believe the economy is now recovering from the recession, it is evident that e-retailers have already started to benefit from an increase in consumer spending."
May 2010 also proved to be a successful month in terms of growth of conversion rates, with multichannel retailers converting 16% more browsers to purchasers compared to last year and like for like conversion rates for online only retailers growing by 10% year on year.
Multichannel retailers benefit most
Growth in sales by retailers with a High Street offering as well as an online presence continues to outstrip that of online only retailers. Multichannel retailers witnessed growth of 30% compared to last year, while online only (‘pureplay’) retailers showed year on year like for like growth of 11%.
Jonathon Brown, head of online selling at John Lewis, commented: "May was another fantastic month for John Lewis online as we continued to drive forward our strategy of adding to our online assortment, improving the customer experience on the site and in our multi channel approach, and expanding our integrated marketing effort. This delivered a 47% year on year increase with star performances across all categories. Fashion was boosted by assortment growth and newness as we launched a series of new brands on johnlewis.com, Home had an outstanding month in all buying offices but particular note to furniture and gifts, and our electricals business was buoyed late on in the period by World Cup fever as customers bought TVs and hard drive recorders in phenomenal volumes. In addition, we saw our online traffic share continue to rise as we invested more in search, partners and email."
Cameron McLean, general manager for merchant services at PayPal UK, said: “PayPal’s own research shows that consumer spending online has increased over the last few months. In the run up to the World Cup it is not surprising that electricals is one of the biggest growing sectors for the month, with more people spending money on LED and plasma-screen TVs. More generally we have seen that consumer confidence has been growing, with PayPal research showing that 43% of shoppers have increased the quality or quantity of what they’ve bought over the last 6 months. Young people in particular have increased their online spend with 37% treating themselves more now than six months ago. Overall it proves that online sales are going to be crucial for the retail sector as it emerges from the recession and returns to growth.”
Iain Wilson, UK managing director of Shopping.com, added: “With the good weather, and a long summer of football ahead, it’s not a surprise that despite continuing gloomy forecasts in the financial market, people are spending more. Staying in is the new going out, so people are willing to spend – on garden furniture, new BBQs, bigger TVs and plenty of food and drink to ensure they have a great time, resulting in overall growth month-on-month for many businesses.”
