UK online sales top £130bn in 2016, fuelled by sales growth on smartphones, IMRG Capgemini eRetail Sales Index shows

£133bn was spent online with UK retailers in 2016, the latest figures from the IMRG Capgemini eRetail Sales Index have revealed. This was £18bn more than the amount spent online in 2015 and meant that the Index registered growth of 16% in 2016. The results demonstrate an exceptional performance for online retail in 2016, exceeding IMRG and Capgemini’s forecast of 11% growth for the year and unexpectedly reversing a trend of declining growth rates over the past few years (see chart below).

For 2017, IMRG and Capgemini forecast e-retail will record a further 14% growth.

The strong performance of online retail in 2016 was fuelled by the continued growth of sales made on smartphones. In December, sales made via smartphones were up 47% year-on-year (YoY). In contrast, sales made on tablets were down 3% YoY**. In December, smartphones accounted for 54% of mobile device sales, with tablets accounting for the other 46%. This is a huge uplift on December 2015, when smartphones accounted for 39% of mobile device sales.

Across sectors, looking at 2016 as a whole, accessories and lingerie witnessed the biggest increase in online sales, up 38% and 33% respectively. This was followed by gifts, up 26%, and footwear, up 21%, all of which exceeded the Index’s average growth rate. However, the health and beauty sector had a year to forget, with online sales in the category tumbling 3%.

Looking at the Christmas period, which is defined as running from 13th November through to 24th December, £25 billion was spent online. This was up an impressive 16% on the amount spent in 2015*** as consumers continued to shop for presents online.

Bhavesh Unadkat, principal consultant in retail customer engagement design, Capgemini: “2016 was a turbulent year with a number of predictions for retail and beyond going against the status quo.  Regardless, it was still a record breaking year for online sales – up 16% on 2015.  Few would have anticipated the decline in sales made on tablets, but with sales made through overall mobile devices generating over 50% of visits, combined with the sweeping growth of both visits and conversions from smartphones, mobile continues to head towards being the number one sales channel.

“2017 will be filled with a level of uncertainty depending on the progress and impact of Brexit, however with the investment retailers are making in improving the customer shopping experience, I am sure it will be another record breaking year for online sales.”

Justin Opie, managing director, at IMRG: “Following a below-expectation year in 2015, online sales growth has shot back up to an extent that seemed highly unlikely at the start of the year. There are two key factors driving this. The first is that Black Friday became an ‘online’ event in 2015, and this seems to have had a lasting effect on people’s shopping behaviour and preferences – our Index has recorded strong growth for online sales ever since that day. The second is that sales through smartphones are continuing to grow at a very strong rate, which is increasing the times and places in which people can browse and engage with online retailers.”