Online spending falters in November, IMRG Capgemini Index reveals

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Webster: disappointing growth for time of year

Webster: disappointing growth for time of year

Online sales in November 2011 were worse than expected as the economic crisis continues to impact upon consumer confidence, new figures from the IMRG Capgemini e-Retail Sales Index reveal.

The Index was up 11% on November 2010, just below IMRG and Capgemini’s forecast of 12-14% growth for Q4, but building on a very strong performance last year (+22% in Nov 2010).

It is worth noting the early snowfall in November last year most likely boosted early online sales, as people unable to access the high street shopped online instead, said IMRG Capgemini. Consumers this year may feel more confident in receiving their deliveries on time if they order in December, researchers said.

This dip in online sales growth mirrors wider retail trends, said IMRG Capgemini. According to the British Retail Consortium, November saw the high-street suffer its biggest annual fall in sales since May this year. In the wake of the ongoing uncertainty surrounding the economy, it would appear British shoppers are exercising greater caution in their purchasing decisions online as well as on the high street, said IMRG Capgemini researchers.

In terms of specific sectors clothing has been hit hard, recording 8% YOY growth; the lowest YOY figures since May 2009 and in contrast with the 34% growth reported in November last year. The mild weather last month (compared with the deep freeze this time last year) has clearly impacted upon consumers’ desire to update their winter wardrobes unnecessarily, said researchers.

Other sectors reporting disappointing sales include alcohol, which reported a YOY growth of just 2%. November is traditionally a busy time for alcohol sales as Brits stock up early in preparation for a boozy festive season, said IMRG Capgemini. 

With online sales down 20% on October, the travel sector was hit the hardest, however. Travel has seen a decline throughout the year, but with shoppers saving up for Christmas presents, expensive holidays are the first luxury to be put on hold until the New Year, said IMRG Capgemini.

However, there was more positive news in other sectors. The electrical sector, which has performed badly throughout 2011, has seen an unexpected return to form, reporting growth of 14% YOY, and an impressive 47% MOM. Health and beauty also enjoyed a solid month, jumping 30% YOY and increasing a significant 63% on October, said researchers. Both these sectors see a spike during the run up to Christmas, as savvy shoppers jump online to purchase popular electrical devices and cosmetics/perfumes for presents.

Chris Webster, head of retail consulting and technology at Capgemini, said: “While these lower than expected growth figures show online is not immune to the economic slowdown, the shift from the high-street to online continues. A growth of just 11% is very disappointing for this time of year as traditionally shoppers start their Christmas shopping early to spread the cost of presents over several pay cheques. This does follow a particularly busy November last year, but nevertheless it is clearly a sign of consumers tightening their belts.”

Tina Spooner, chief information officer at IMRG, said: “While the growth in e-retail sales in November is weaker than expected, this is on the back of a very strong performance in November 2010 when the Index recorded growth of 22%. With consumers suffering the biggest squeeze on the cost of living and disposable incomes in over 50 years, it appears the strain on high street retailers may now also be affecting the online retail sector.

“Clothing sales were particularly poor in November, no doubt compounded by the mild weather, as consumers delayed updating their winter wardrobes. However, online electrical and health & beauty retailers fared better last month, with sales up 14% and 30%, respectively. It is also worth noting that we have not seen a repeat of the widespread snow disruption that heavily impacted upon deliveries last year, so consumers may be more confident in leaving their shopping a bit later this Christmas.”