E-commerce index records lowest growth levels for 18 months, with a sluggish travel sector sales contributing to slow down
E-commerce index records lowest growth levels for 18 months, with a sluggish travel sector sales contributing to slow down
Online shopping sales were up just 11.5% last month, leading the IMRG Capgemini e-Retail Sales Index to record the lowest year-on-year growth since January 2010.
It found that British shoppers spent £5.58 billion online in July; up 5% on the previous month – but which amounts to a modest growth that has been hampered by poor online sales in the travel sector.
The Index said 1% year-on-year negative growth in the travel sector was consistent with the industry at large, with many travel companies seeing bookings decline this year.
Further evidence of a poor month was in the electricals sector, which declined 3% compared with the previous year, having grown 17% year-on-year in July 2010.
Overall, the slowing of online growth was counterbalanced by the High Street, which reported a 2.5% month-on-month sales increase in July helped by a food and clothing sales boost according to British Retail Consortium figures.
Still room for optimism online
However online, certain sectors did perform strongly such as home and garden, which increased 27% year-on-year compared with slow growth last year of only 8%. The clothing sector continued to expand rapidly, seeing a 25% year-on-year rise as shoppers updated their wardrobes for the summer season and took advantage of the sales.
Chris Webster, head of retail consulting and technology at Capgemini, said: “The slowdown in July shows the internet is not immune in tough times. Successful retailers will need to expand into multichannel and continue to improve customer experience throughout the online shopping processes. Furthermore, with such a successful first half of 2011, it was a tall order for online sales to maintain such rapid growth.”
Tina Spooner, chief information officer at IMRG, added: “While the Index performed ahead of expectation during the first six months of the year, a slowdown in e-retail growth during the second half was always going to be a possibility. Between July and December last year the Index recorded strong growth, with sales up 21% year-on-year, and therefore over the coming months sales may well be slower, having come from a stronger base last year. However, online retail continues to consistently deliver double-digit growth, despite the retail gloom on the High Street.
Multichannel becomes strategic imperative
“With budgets being squeezed and disposable incomes shrinking, it is evident that consumers are making more considered purchases, especially on higher-ticket items, by researching across multiple online channels in order to make their money go further,” she added.
Simon Walker, director of product management at strategic information management company Stibo Systems, told Retail Technology: “Retailers need to consider strengthening their mobile strategies, ensuring that mobile websites are easy to navigate and provide a good customer experience. To encourage purchases and customer engagement, retailers should also view mobile as more than just a transactional platform, offering high-quality content and applications that customers will keep coming back to.
“Finally, in order to maximise sales, retailers should think about what product information is displayed across multiple channels. If a customer is not in a shop feeling fabrics or smelling produce, accurate and detailed product information is key to converting browsing into sales. As retailers put more emphasis on multichannel strategies, we may see e-commerce recover over the coming months.”
