£5.3 billion spent online during May delivers growth for low-ticket items according to IMRG figures, but high-value purchases lag behind

£5.3 billion spent online during May delivers growth for low-ticket items according to IMRG figures, but high-value purchases lag behind

The latest figures from the IMRG Capgemini e-Retail Sales Index have revealed continuing strong growth for online sales in May, with shoppers in the UK spending a total of £5.3 billion online, an impressive 18% more than May 2010, and up 2% on last month. To date, £25.7 billion has been spent online during 2011.

This strong performance for online shopping in sharp contrast with figures released by the British Retail Consortium earlier this month, which showed that, despite a surge in sales during the Royal Wedding and Easter celebrations, the UK High Street suffered a weak performance in May; -0.3% year-on-year and down 2.1% on April 2011.

The Index said sustained growth in e-retail sales was largely being driven by the sectors selling low-ticket products, such as clothing and alcohol, while sectors with higher-ticket products were lagging behind by comparison.

Alcohol, clothing and travel are winners

Alcohol sales jumped 25% year-on-year, and were up 5% on April. The average basket value for alcohol sales in May was £161, the second highest value since November 2007 and nearly double the £85 average spend in May 2010. This surge is supported by the results posted by Majestic Wines on Monday, which reported pre-tax profits of 27% and prompted the company to announce plans to double its size.

The clothing sector also had an impressive month with year-on-year figures growing by 24% in May. While the travel sector also enjoyed a 12% increase on May 2010 and a 13% rise on April’s figures. The average travel basket value has also seen an increase; in May last year the average online travel spend was £669. In May 2011, the cost has risen by two hundred pounds to £869. Two likely factors for this are the huge hike in flight taxes introduced in November last year and an increase in ticket prices as airlines look to recoup losses suffered during the recession.

Chris Webster, head of retail consulting and technology at Capgemini, stated: “May was another strong month for online retail with sales jumping 18% on this time last year.”

He also said that May highlighted some interesting trends in shopping behaviour. “While the High Street suffers in the wake of the struggling economy consumers continue to migrate online,” Webster continued. “However, it is important to note the emerging disparity between the big-ticket items, such as travel and electrical goods, and the less expensive items, like clothing and alcohol. As the economy suffers, expensive purchases are increasingly seen as discretionary. By omitting the travel sector from the figures, the year on year growth increases to an even more impressive 21.5%.”

Tina Spooner, director of information at IMRG, said: “Online is continuing to set the pace in retail, with both clothing and alcohol e-retailers performing particularly well in May and boasting annual growth year-to-date of more than 25%. Overall, since January the Index has grown 18% year-on-year, which is in line with our forecast for 2011.”

Multichannel outstrips pureplay growth

The results have illustrated another potential trend. Multichannel retailers, those stores that have both a High Street and online presence, such as John Lewis, have reported an average of 23% growth on May 2011 and up 5% on last month. Online only retailers (where figures include catalogue sales) however have only seen 9% year-on-year growth and a 2% decline on April 2011.

“Online retail is continuing to flourish,” said Cameron McLean, general manager for merchant services at PayPal UK. “The PayPal UK Online Retail Report 2010 found that over two thirds (71%) of shoppers think the best deals are available online with an additional 66% saying their money goes further when shopping online.”

McLean added: “Multichannel is important for shoppers in terms of advantages of online and offline shopping. With many online shoppers still seeing the best value online and online retail sales figures increasing, a strong multi-channel retailing strategy is essential for businesses to not only offer a range of options for shoppers but also to attract new shoppers.”