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Shoppers in the UK spent a total of £7.9bn online during December

Shoppers in the UK spent a total of £7.9bn online during December
Wednesday January 25 2012

Forecast for 2012: 13% growth and approximately £77bn in total e-retail sales

The latest figures from the IMRG Capgemini e-Retail Sales Index reveal that shoppers in the UK spent a total of £7.9bn online during December, equivalent to £155*  per person.
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 £68bn was spent online in 2011, which resulted in the Index increasing by 16%. For 2012, IMRG and Capgemini predict the Index will record a further 13% growth, with total e-retail sales estimated to be worth £77bn by year end.

The December figures show 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.

Chris Webster, head of retail consulting and technology at Capgemini says: “Strong online sales over Christmas were even more impressive since they built on a 25% year on year growth from 2009 to 2010.. During 2011 we saw continued pressure on sales as shoppers became savvier in looking for bargains and this continued in the run up to Christmas.

The rapid rise of mobile in 2011 will continue into 2012 as consumers became familiar with shopping via tablet devices and smartphonest, some taking advantage of their recent Christmas presents. This changing landscape will open up a myriad of opportunity for retailers including the integration of stores into the multi-channel world and the potential of new capabilities like location based markerting services.”

The Christmas sales and 16.5% year-on-year growth on December 2010 represents a strong recovery on the 11.2% year-on-year growth reported in November. It is still below the growth levels seen 12 months ago (25% year-on-year growth December 2009 – December 2010), but demonstrates that the online market still offers a very positive growth opportunity. 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.

This slowdown is due 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.

Furthermore, 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 are turning huge profits. This is partly due to the spending power of middle-income Britons being squeezed by rising inflation and low wage increases while high net worth individuals continue to earn and spend.

This is also apparent in the travel sector as, while growth has declined, the average purchase has 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/ catalogue retailers are gaining ground in year-on-year growth as high street / 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, CEO of IMRG, 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.

* Calculation by 7.9 billion, divided by adult population of UK (50,893,318)

Tagged as: imrg |

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