Low-ticket products drive sustained impressive online growth levels

| Press release
Consumers happy to splash out on the little things, but reluctant to buy big, says IMRG Capgemini e-Retail Sales Index
  • £5.3 billion spent online during May; a year-on-year increase of 18%
  • Low-ticket items see growth, but high-value purchases lagging behind
  • Alcohol sector continues growth with average order reaching £161; up 25% on May 2010
  • Average travel spend online soars to an average of  £869 a year

The latest figures from the IMRG Capgemini e-Retail Sales Index have revealed continuing strong growth for online sales in May, with shoppers in the UK spending a total of £5.3 billion online, an impressive 18% more than May 2010, up 2% on last month and equivalent to £86 [1] per person. To date, £25.7 billion has been spent online during 2011.

This strong performance for online shopping in sharp contrast with figures released by the British Retail Consortium earlier this month, which showed that, despite a surge in sales during the Royal Wedding and Easter celebrations, the high street put in a very weak performance in May [2] ; -0.3% year-on-year and down 2.1% on April 2011.

The sustained growth in e-retail sales is largely being driven by the sectors selling low-ticket products, such as clothing and alcohol, while the sectors with higher-ticket products are lagging behind by comparison.

Brits’ party spirit still in full swing
Although the weather took a turn for the worse last month, with much of the UK reporting dismal conditions in May , it seems that the British party sprit couldn’t be dampened, with alcohol sales jumping 25% year-on-year, and up 5% on April. The average basket value for alcohol sales in May was an impressive £161, the second highest value since November 2007 and quite a difference to the £85 average spend in May 2010. This surge in alcohol sales is supported by the results posted by Majestic Wines Plc on Monday, which reported pre-tax profits of 27% and prompted the company to announce plans to double its size.

The clothing sector also had an impressive month with year-on-year figures jumping 24% in May. It seems that whilst earlier reports from the high street indicated clothing was one of the worst hit sectors, consumers were more than happy to jump online in preparation for the anticipated warmer weather.            
Cost of a holiday goes sky-high
After a very poor start to the year, the travel sector has welcomed a return to growth, albeit only just, with a 12% increase on May 2010 and a 13% rise on April’s figures. The average basket value has also seen an increase; in May last year the average online travel spend was £669. In May 2011, the cost has risen two hundred pounds to a staggering £869. Two likely factors for this are the huge hike in flight taxes introduced in November last year and an increase in ticket prices as airlines look to recoup losses suffered during the recession.

Chris Webster, head of retail consulting and technology at Capgemini says: “May was another strong month for online retail with sales jumping 18% on this time last year.

“May also highlighted some interesting trends in shopping behaviour. Whilst the high street suffers in the wake of the struggling economy consumers continue to migrate online. However, it is important to note the emerging disparity between the big ticket items, such as travel and electrical goods, and the less expensive items, like clothing and alcohol. As economy suffers, expensive purchases are increasingly seen as discretionary. By omitting the travel sector from the figures, the year on year growth increases to an even more impressive 21.5%.”

Tina Spooner, Director of Information at IMRG comments: “Online is continuing to set the pace in retail, with both clothing and alcohol e-retailers performing particularly well in May and boasting annual growth year-to-date of more than 25%. Overall, since January the Index has grown 18% year-on-year, which is in line with our forecast for 2011. However, we are seeing a pretty clear split between the sectors selling low-cost products and those selling high-value ones, with travel, electricals and home and garden lagging some way behind in terms of growth. So although overall growth is very positive, it seems perhaps consumers are wary about making those big-ticket purchases in the current economic climate.”

The results have illustrated another potential trend.  Multi-channel retailers, those stores that have both a high-street and an online presence, such as John Lewis, have reported an average of 23% growth on May 2011 and up 5% on last month. Online only retailers (figures include catalogue sales) however have only seen 9% year-on-year growth and a 2% decline on April 2011. The cause of this is unclear, but it is unusual for multi-channel and online only retail sales to diverge mid-year; it is a trend more common around Christmas.

IMRG eRetail Sales Index for May

Industry quotes

Cameron McLean, general manager for merchant services at PayPal UK, said:
Online retail is continuing to flourish with Brits spending a staggering £5.3 billion online in May, an increase on the amount spent online in April. More and more retailers are adopting a multi-channel approach to their shopping platforms which has led to a 23% year-on-year rise in performance, demonstrating the benefits of giving consumers the flexibility of shopping when they want and how they want.

“The PayPal UK Online Retail Report 2010 found that over two thirds (71%) of shoppers think the best deals are available online with an additional 66% saying their money goes further when shopping online. Multi-channel is important for shoppers in terms of advantages of online and offline shopping. With many online shoppers still seeing the best value online and online retail sales figures increasing, a strong multi-channel retailing strategy is essential for businesses to not only offer a range of options for shoppers but also to attract new shoppers.”

Russ Carroll, UK Managing Director of Shopping.com, comments:
The fashion bug appears to have hit British consumers as demand for clothing and shoes continue to drive strong growth in the e-retail market. More and more of the high street fashion brands are turning to the internet to spearhead choice and convenience for consumers. At the same time, savvy shoppers are enjoying the benefits of having access to more of the high street online, making it increasingly more convenient for consumers to compare options and get the best value for money.”

Angus McCarey, UK Retail Director for eBay, commented:
The state of the economy means that value-conscious consumers are continuing to look online for the best fashion deals. Fashion remains one of our best performing categories, with around 4 million visitors every month to our site.

Accessing that volume of potential customers is a key reason why many high street brands are choosing to sell in different places and in different ways online outside of their own websites. Only last month, we saw leading sports retailer Sports Direct joining the 100 high street brands which already sell through eBay.”

Chris Nixon, MD for Kelkoo Travel, says:
This month’s index looks promising for the travel industry, with travel spend showing a 12% year on year increase. Interestingly, UK holiday makers are spending almost a third more on individual bookings, totalling £669. This 30% rise could be attributed to the growing all inclusive market as travellers want the peace of mind of one set payment for the entire holiday, particularly when faced with the expense of the Euro zone. This gives consumers reassurance that they don’t have to worry about additional costs when they reach their destination, making holidays much easier to budget for. Research suggests that these packages now account for 37% of the UK travel market, a trend which we expect to continue throughout 2011 as people continue to fight against a tough economic climate in the UK.”

Notes to Editors
About IMRG
IMRG (Interactive Media in Retail Group) is the industry association for global e-retail. Formed in 1990, IMRG is setting and maintaining pragmatic and robust e-retail standards to enable fast-track industry growth, and facilitates its community of members with practical help, information, tools, guidance and networking. Consumers can be confident when dealing with IMRG Members because all interact in an environment where they are encouraged to operate using methods that are Honest, Decent, Legal, Truthful and Fair, and have undertaken to not bring the industry into disrepute. The strength of IMRG is the collective and cooperative power of its members. For more information please visit http://www.imrg.org/ or email market@imrg.org

About Capgemini
Capgemini, one of the world’s foremost providers of consulting, technology and outsourcing services, enables its clients to transform and perform through technologies. Capgemini provides its clients with insights and capabilities that boost their freedom to achieve superior results through a unique way of working, the Collaborative Business ExperienceTM. The Group relies on its global delivery model called Rightshore®, which aims to get the right balance of the best talent from multiple locations, working as one team to create and deliver the optimum solution for clients. Present in more than 30 countries, Capgemini reported 2009 global revenues of EUR 8.4 billion and employs 90,000 people worldwide.
More information is available at www.capgemini.com.
Rightshore® is a trademark belonging to Capgemini

About the ‘IMRG Capgemini e-Retail Sales Index’
The IMRG Capgemini Index, which was started in April 2000, tracks ‘online sales’, which we define as ‘transactions completed fully, including payment, via interactive channels’ from any location, including in-store.  These sales are predominantly internet-based today, but the Index remains ready to record e-retail sales conducted via whatever interactive channels the market may embrace in the future.

Around one hundred e-retailers now regularly contribute data to the IMRG Capgemini Index, including Airport Parking & Hotels Ltd, Amara, Arcadia Group (Burton, Top Man, Top Shop, Dorothy Perkins, Evans, Wallis, Miss Selfridge), Ask Direct, ASOS.com, Beautique.com, BeCheeky.com, Berry Bros & Rudd,  Binends.com, Blacks, Boden.co.uk, Boohoo.com, Boots Direct, Brandosa.co.uk, Brora, Buyagift.com, BuyItDirect.co.uk, Carphone Warehouse, Charles Tyrwhitt,  Clarks, Cloggs, Comet, Co-operative Travel, Crocus.co.uk, Dabs.com, Damart, Debenhams, Dobbies, e-flowersUK.co.uk, Ethical Superstore, Figleaves.com, Firebox, First Choice, Freemans Grattan Holdings, Furniture123, Game, Gameplay, Gamestation, Getting Personal.co.uk, Greenfingers.com, Home & Cook, House of Fraser, JD Sports, J D Williams, John Lewis Partnership, Ladderstore.com, Lastminute.com, LK Bennett, Lookfantastic.com, M and M Direct, Made in Sheffield, Marks & Spencer, Matalan, Millets, Monster Travel, Musto, My Tuxedo, Naked Wines, NaturalCollection.com, New Look, Next, Peacocks, Perfect Handbags, PetPlanet.co.uk, Philip Kingsley, PIXmania, Prezzybox.com, QVC, Redfoot Revolution, Richer Sounds, Sainsbury’s, Scales Express, Shoe-Shop.com, Shop Direct Home Shopping, Schuh, Serenata Flowers, Shedstore, Sofa and Home, Sunshine.co.uk, Tesco.com, The Fragrance Shop, The Health Supermarket, The Natural Store, TUI UK, Turton Wines, Vie at Home, Waitrose, Wilkinson Hardware & Wynsors World of Shoes.

[1] Calculation by 5.3 billion, divided by 61,838,154 (www.google.com/publicdata)
[2] http://news.bbc.co.uk/weather/hi/uk_revi ews/newsid_9504000/9504017.stm