IMRG Capgemini e-Retail Sales Index reveals UK love affair with online shopping
IMRG Capgemini e-Retail Sales Index reveals UK love affair with online shopping
UK consumers spent a staggering £250 billion shopping online in the last decade. That’s according to the Interactive Media In Retail Group (IMRG) Capgemini e-Retail Sales Index, which is today celebrating its 10th anniversary.
It said the British love affair with online retail therapy shows no signs of abating, with sales during 2010 alone expected to hit £56 billion.
That figure contrasts sharply with the numbers captured in the Index’s first year. During 2001 UK e-retail sales were just £1.8 billion with just six million Britons shopping online.
The Index’s performance over the last decade tells the story of e-retail success. It has grown by 5,772% since launch and continues to track the rise and rise of an industry that still continues to grow, despite the continued challenging economic conditions.
Boost to specific retail sectors
The Index tracks not only the UK’s macroeconomic picture, with 35% growth during 2006 slowing to 14% during recession-torn 2009, but also the fortunes of individual market sectors.
Peaks in sales of beers, wines and spirits are seen to track the success of the English football team in major tournaments. Sales of clothing online have exploded as rich media imagery has enabled fashionistas to pan, zoom and see items on the body via video clips. Home & Garden is the latest sector to be broken out and will provide insight against the background of the UK’s troubled housing market.
James Roper, IMRG chief executive, said: “Britons are passionate about shopping online. The combination of ease, convenience and 24-hour access is incredibly compelling. We expect to see that relationship strengthen over the coming decade and by 2020 we predict that the internet will account for half of all retail sales and influence most of the other half.”
For the future, IMRG is predicting greater cross-border trading as the UK market continues to mature. But with it, it warned, will come challenges from European legislators, the need to meet different cultural tastes and payment preferences.
Mobile commerce (m-commerce) is set to become the defining technological advancement of this decade. Improvements in handsets, browsers, content and data packages mean m-commerce’s time has come.
Continued growth predicted
IMRG and Capgemini predict that the UK’s online retail market will grow by 110% in the next decade, reaching £123 billion by 2020. According to their forecast, growth will slow down to 6% year-on-year, as the market matures and reaches a tipping point.
Jonathon Brown, head of online selling at John Lewis, commented: “John Lewis first launched its website in 2000 with 200 products available online. 2001 saw the acquisition of buy.com (UK) and, as a result, John Lewis Direct was launched with 4,500 products online. Over the next two years televisions, fridges, washing machines and sofas were added to the website assortment and we reached over 10,000 orders in our peak week.
“By 2005, John Lewis Direct had seen over 1 million visits to the website in a week and we started to add product video demonstrations to the site, it was in this year that our full year sales surpassed £100 million and on 26 November 2006 we marked our first million-pound day. Over the last three years there have seen incredible developments to the site including the addition of made-to-measure curtains and blinds to the assortment, the launch of click and collect (buy online, pick up in-store) and introduction of express delivery (48 hours) on white goods.”
Christian Robinson, managing director Firebox.com, which has just announced annual profits of over £1 million, added: “Since its humble beginnings in an attic in Cardiff, Firebox has since grown into a trusted UK e-retail brand – grossing total retail revenues of more than £70 million across 2 million orders in the 10 years since launch. Over this period Firebox has shipped its range of quirky gifts to 136 countries around the world, with customers in such remote areas as Tierra del Fuego – the southernmost city on the planet."
Consumers look for choice, value
According to PayPal, online shopping has been the fastest growing sector of the retail market in the last two years. It is also forecast to post the largest growth in British retailing, outstripping the wider retail sector, before 2013. Looking to the future, Cameron McLean, general manager for merchant services at PayPal UK, said: “The face of online retail is set to change considerably in the next ten years as the rise of social media creates a collective shopping power.
“Our latest research shows over 16 million shoppers (34%) are already creating peer reviews online and 36% usually refer to reviews before making a purchase. Over one in 10 (12%) internet users are already a fan of a brand, retailer or product on a social networking site, such as Facebook and this trend is only going to go up.”
McLean concluded: “In response, we expect online retail to become a much more collaborative experience for consumers. Just as gaggles of shoppers used to hit the High Street on a Saturday, now shoppers will share reviews, highlight great deals and ask their peers’ opinions of purchases at any time of day, via sprawling social networks.
“The other major change in internet retailing over the last 10 years has been the growth of online price comparison. Nearly two thirds (65%) of shoppers compare prices online before buying something costing over £100, but more than one in two (53%) also now compare prices on everyday items, suggesting online retail is set to become even more about ‘getting the best deal available’ than it already is.”
