Trade body reveals record index score with 16.5% year-on-year growth and predictions of strong growth
Trade body reveals record index score with 16.5% year-on-year growth and predictions of strong growth
The latest figures from the IMRG Capgemini e-Retail Sales Index reveal that shoppers in the UK spent a total of £7.9 billion online during December.
Sales were up by 12.2% on November and by 16.5% on December 2010, with the index value reaching a record high.
A total of £68 billion was spent online in 2011, which resulted in the index increasing by 16%. For 2012, trade body IMRG and Capgemini predict it will record a further 13% growth, with total e-retail sales estimated to be worth £77 billion by year-end.
Christmas trading provides boost
The December figures showed that online retailers had a successful Christmas, mirroring the High Street success reported by the British Retail Consortium of 2.2% growth. E-retail now accounts for 17% of the total UK retail market and is likely to increase with the rise of mobile commerce and the huge numbers of tablet computers sold last year, the organisations added.
Chris Webster, head of retail consulting and technology at Capgemini, said: “Strong online sales over Christmas went some way towards rescuing the performance of the year as a whole. During 2011 we saw continued pressure on sales as shoppers became savvier in looking for bargains. The influence of mobile is set to build in 2012 as consumers became familiar with shopping via tablet devices and smartphones, thanks, in part, to slicker websites and devices. To cope with this changing landscape, retailers need to be more targeted in their marketing by using location based services.”
Travel and clothing under pressure
The Christmas sales and 16.5% year-on-year growth on December 2010 represented a strong recovery on the 11.2% year-on-year growth reported in November. It was still below the growth levels seen 12 months ago (25% year-on-year growth from December 2009 to December 2010). That said, the average growth rate throughout the first half of 2011 was in the high teens, but dropped to the low teens in during the second half. The index attributed this slowdown to sales in the travel sector slipping, as well as a disappointing second half for the clothing sector, which saw a decline in year-on-year growth from 40% in December 2010 to just 12% in December 2011.
A number of well-known fashion brands at the mid to low-end of the market reported poor sales in their recent trading statements while luxury brands turn huge profits. This is partly due to the spending power of middle-income Britons being squeezed by rising inflation and slow wage increases, while high net worth individuals continue to earn and spend. This was also apparent in the travel sector as, while growth declined, the average purchase increased from £731 in 2010 to £850 in 2011, reflecting higher costs for flights and resilience in luxury holidays for high earners.
Online-only versus multichannel
Online-only and catalogue retailers are gaining ground in year-on-year growth as high street and multichannel experienced a decline in the second half of 2011, dropping from 25% to 14% growth. In comparison, online-only retailers’ sales rose from 11% in the first half of 2011 to 13% in the second half, reflecting a flight toward lowest cost options in contrast to previous preferences for the ease and familiarity of a high street brand.
James Roper, IMRG chief executive, said: “The December results are incredibly impressive as the growth for the same period in 2010 was 25%, meaning it had to climb from a very high base. Despite the fact that consumers are finding themselves with less and less disposable income, the e-retail market keeps defying the general retail trend to record double-digit growth. Online is such an integral part of the shopping experience now that it generally plays at least some part in most purchases, whether through research and comparison or social media and product reviews.
“We are forecasting growth of 13% moving into 2012, lower than our estimate for 2011 but it would still be an extremely positive performance given the economic climate and the fact that the online market has reached a degree of maturity now, meaning it can offer a really key contribution to help drive the economic recovery.”
Retailers confirm positive outlook
Jonathon Brown, head of online at John Lewis and IMRG member, commented: “December was a great month for johnlewis.com and online sales for the five weeks to 31 December 2011 were +29.7% across the site. We saw record breaking sales across all of our directorates and more customers than ever coming to johnlewis.com to plan, choose and buy their perfect gifts for Christmas.”
Russ Carroll, UK managing director of Shopping.com, added: “The Christmas rush came later this year, partly due to the fact that retailers offered delivery as late as two days before Christmas Day. It’s likely the recession also played a part, as consumers held out for the sales in a bid to find the best bargains. Clothing experienced consistent e-retail growth in 2011 and this is something we expect to see continue well into 2012.”
