£5.1 billion spent online during March, according to online retail benchmark, equating to 14% year-on-year increase
£5.1 billion spent online during March, according to online retail benchmark, equating to 14% year-on-year increase
As the High Street reports the worst drop in sales for 15 years, the latest figures from the IMRG Capgemini e-Retail Sales Index have revealed that online sales are bucking the trend by recording continued growth.
It has reported that in March, shoppers in the UK spent a total of £5.1 billion online, 14% more than March 2010. Significantly, the Index has seen 18% growth during the first quarter (Q1)of this year compared with the same period last year, which confirms it as the strongest Q1 performance in three years.
With the health and beauty sector (which includes perfume and make up) up 20% from February, and 32% year-on-year, the Index revealed the impact that Mother’s Day had on online sales. Although March was not a particularly strong month for the gifts sector, it did see a 55% leap during the week before Mother’s Day.
Timing crucial for travel
Despite a very strong start to the year, the travel sector took a nose dive in March, plummeting 15% on February and down 2% compared with March 2010. This is the first time the sector has declined year-on-year in over 12 months. The Index suggested this drop could be attributed to several factors. A later Easter would have certainly been an issue, as last minute travel deals would have been put off until mid-April. However, the Budget, announced on 23 March, is likely to have been the major contributing factor, as consumers tightened their belts in the run up to, and in the wake of, the government’s severe austerity measures. This is also reflected in the drop in other big-ticket sectors, such as electrical goods, which saw an 8% decline from February.
Chris Webster, head of retail consulting and technology at Capgemini, said: “March was a solid month for online retail; 14% annual growth is a healthy result and quite a contrast to the reports from the high-street. The 18% growth in the Index during Q1 is indicative of a new trend. Consumers are indeed tightening belts, but they are still shopping, and have simply become more strategic in their buying habits.”
Tina Spooner, director of information at IMRG, commented: “The Index reveals an encouraging performance for the e-retail market during March and confirms that online continues to be the beacon for the UK retail market during these tough economic conditions, with the High Street suffering its worst drop in sales for 15 years during the same period. The 18% annual growth recorded in the first quarter of 2011 is in line with our prediction for the year.
“IMRG’s recent online confidence survey revealed that over 70% of UK retailers expect online sales to remain healthy for the remainder of the year which, when combined with the solid growth recorded by the Index, indicates that the outlook for 2011 remains positive for the UK e-retail industry.”
Gain multichannel brand exposure
The ever-widening gap between multichannel and online-only retailers continued to increase in March. Those with both a High Street and online presence witnessed a 19% growth on average compared with March last year, while online-only retailers experienced just 6%.
Jonathan Brown, John Lewis head of online selling, said: “John Lewis online had another strong month, with sales up over 24% with all product areas exceeding both 2010 sales, and our expectations. However it was interesting to see that, while overall traffic saw slightly slower growth than we have been used to, customers who were on our website were converting at a higher rate, spending more each time they shopped with us.
Phillip Rinn, senior director of advertising at eBay International, commented: “The latest Index highlights how the online High Street is resilient to wider retail and economic trends. At a time when recent figures highlight wider retail sales have seen their worst monthly decline in 15 years, the 5% month-on-month increase in online retail revenue is particularly impressive and shows that at a time when belt tightening was expected across the board, online continues to buck the trend. For marketers, it has never been more important to ensure they have a strong presence on the online High Street in order to grab a slice of that £5.1-billion pie.”
