Third quarter results reveal Brits still settling for the little things in life, with £5.5bn spent online leading Index to revise growth forecast down for 2011
Third quarter results reveal Brits still settling for the little things in life, with £5.5bn spent online leading Index to revise growth forecast down for 2011
The latest figures from the IMRG Capgemini e-Retail Sales Index have revealed a solid performance in the online sales market for September, with the Index climbing 15% year-on-year (YOY), equating to £5.5bn spent online.
With the travel sector is excluded, the Index grew at 20% YOY. The strength of these results is highlighted even further when compared with the UK High Street, which according to the latest British Retail Consortium sales monitor, grew 0.3% on last year in terms of value on a like-for-like basis.
Despite last month’s good performance, IMRG and Capgemini have reviewed their original prediction of 18% annual growth for 2011, and downgraded it to 16% – equating to a 12-14% increase for the fourth quarter. Although this is still strong, it does show that the rate of growth is slowing down; total growth in 2010 reached 18%.
The sectors that have performed particularly well during September included clothing, home and garden, and alcohol – as ‘small-ticket’ items continue to sell well. Compared to the same month last year clothing jumped 21%, alcohol 16%, and for the second month in a row, home and garden saw 40% growth. ‘Big-ticket’ items however suffered, seeing falls for electricals (9% YOY) and travel, which saw a growth of just 4% and a month-on-month decline of 17%.
Still spending but cautiously
Chris Webster, head of retail consulting and technology at Capgemini, said: “Reviewing the results in September, at the end of the third quarter, provides us with a good opportunity to assess how the economic turbulence is affecting the shopping habits of British consumers in 2011. It appears that rather than cutting back entirely, we have been more conscientious in our purchases – faced with uncertainty, shoppers are prepared to cut back on luxuries, but not from shopping altogether. Smaller items, such as clothing and items for the home, are considered rewards for our belt tightening, or just more sensible purchases.”
David J Smith, chief marketing & communications officer at IMRG, said: “While consumer confidence in the online market was high in the first half of 2011, with the Index recording growth of 19% on the same period of 2010, there has been a slight dip in terms of the growth levels. We are now forecasting a 16% rise for the market for 2011 as a whole, revised down from our 18% forecast at the beginning of the year, which would equate to around 12-14% for Q4. This will still be an impressive performance, as it is off the back of a very strong Q4 in 2010.
“The tough times for the travel sector are showing little sign of improving any time soon, with consumers focusing on home improvements rather than going on holiday. This is borne out by the strong yearly growth in the home and garden sector, the second consecutive month that it has recorded a rise of 40%. It is clear that both the stagnation in the housing market and the continuing uncertainty over the economic recovery are influencing consumer behaviour in the online market.”
Russ Carroll, UK managing director of Shopping.com, commented: “Home appliances such as kettles, heaters and irons showed strong growth in September, a sign that people were starting to prepare for winter despite the unexpectedly warm weather. While clothing once again showed very strong year on year growth, confirming that buying clothes online has well and truly arrived.”
Managing the seasonal transition
Jonathon Brown, head of online selling at John Lewis, added: “September was another strong month for John Lewis online delivering growth of over 25% across categories. Although we saw transition from summer to autumn, the weather missed this point and especially as we got to the end of the month the Indian summer inevitably impacted our growth. However it was great to see that fashion, an area most affected by seasonal changes, still delivered over 50% growth on last year.
"Home had a good month delivering over 25% year-on-year growth with notable outperformances in textiles, carpets and furniture, with customers enjoying both our core Value ranges as well as new designer ranges.
“Finally, in electricals and consumer technology we saw strong performances across the categories, especially in computing with iPads and desktops selling strongly. Streaming and headphones also delivered outstanding sales within audio. So now we are into autumn it's all to play for as we drive towards our Christmas peak and given the excellent assortment we have online there are many reasons to be positive about the rest of the year."
