Online sales soar 16.5% to £7.9bn, IMRG Capgemini figures reveal

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Online sales in the UK reached £7.9bn in December 2011, equivalent to £155.00 per person, fiigures from the IMRG Capgemini e-Retail Sales Index reveal. 

Sales were up by 12.2% on November 2011 and by 16.5% on December 2010, with the Index value reaching a record high.

A total of £68bn was spent online in 2011, which resulted in the Index increasing by 16%. IMRG and Capgemini predict the Index will record a further 13% growth in 2012, with total e-retail sales estimated to be worth £77bn by the year end. 

The December figures show online retailers had a successful Christmas, said IMRG Capgemini. E-retail now accounts for 17% of the total UK retail market and is likely to increase with the rise of mobile commerce and the huge numbers of tablet computers sold last year, they said.

Chris Webster, head of retail consulting and technology at Capgemini, said: “Strong online sales over Christmas went some way towards rescuing the performance of the year as a whole. During 2011 we saw continued pressure on sales as shoppers became savvier in looking for bargains.

“The influence of mobile is set to build in 2012 as consumers became familiar with shopping via tablet devices and smart phones, thanks, in part, to slicker websites and devices. To cope with this changing landscape, retailers need to be more targeted in their marketing by using location based services.”

The Christmas sales and 16.5% year-on-year growth on December 2010 represents a strong recovery on the 11.2% year-on-year growth reported in November, said IMRG Capgemini. 

It is still below the growth levels seen 12 months ago (25% year-on-year growth December 2009 – December 2010), but demonstrates the online market still offers a very positive growth opportunity, said researchers. 

That said, the average growth rate throughout the first half of 2011 was in the high teens, but dropped to the low teens in during the second half. This slowdown is due to sales in the travel sector slipping, as well as a disappointing second half for the clothing sector, which saw a decline in year-on-year growth from 40% in December 2010 to 12% in December 2011, said IMRG Capgemini.

Furthermore, a number of well-known fashion brands at the mid- to low-end of the market reported poor sales in their recent trading statements while luxury brands are turning huge profits, said IMRG Capgemini.

This is partly due to the spending power of middle-income Britons being squeezed by rising inflation and slow wage increases while high net worth individuals continue to earn and spend, researchers said.

This is also apparent in the travel sector as, while growth has declined, the average purchase has increased from £731 in 2010 to £850 in 2011, reflecting higher costs for flights and resilience in luxury holidays for high earners, according to IMRG Capgemini.

Online-only versus multi-channel

Online-only and catalogue retailers are gaining ground in year-on-year growth as high street and multi-channel experienced a decline in the second half of 2011, dropping from 25% to 14% growth. In comparison, online-only retailers’ sales rose from 11% in the first half of 2011 to 13% in the second half, reflecting a flight toward lowest cost options in contrast to previous preferences for the ease and familiarity of a high street brand.

James Roper, CEO of IMRG, said: “The December results are incredibly impressive as the growth for the same period in 2010 was 25%, meaning it had to climb from a very high base. Despite the fact consumers are finding themselves with less and less disposable income, the e-retail market keeps defying the general retail trend to record double-digit growth. 

“Online is such an integral part of the shopping experience now it generally plays at least some part in most purchases, whether through research and comparison or social media and product reviews. 

“We are forecasting growth of 13% moving into 2012, lower than our estimate for 2011 but it would still be an extremely positive performance given the economic climate and the fact the online market has reached a degree of maturity now, meaning it can offer a really key contribution to help drive the economic recovery.”

% ChangeNov 11 – Dec 11 % ChangeDec 10 – Dec 11
Beers, Wines and Spirits 53% 18%
Clothing, Footwear and Accessories 11% 12%
 – Accessories 27% 46%
 – Footwear 7% 21%
Electricals 10% 11%
Gifts 36% 13%
Health and Beauty 31% 63%
Lingerie 17% 35%
Travel -11% 4%
Home & Garden 4% 45%