- £15.2 billion spent online in 12 week run up to Christmas 2007 according to first set of official figures for UK
- Christmas surge delayed as shoppers wait for online sales
- Electrical sector proves an online winner
Online shopping reached an all time high in the run up to Christmas, with £15.2 billion spent online in October to December bringing full year UK e-retail sales to £46.6 billion, up 54% on the £30.2 billion recorded for 2006, according to the ‘IMRG Capgemini e-Retail Sales Index.’
Within key sectors such as electrical goods, the research indicates that growth in online sales does come at the expense of high street retailers.
Anthoula Madden, Vice President at Capgemini UK’s Consumer Products and Retail Team says, “Online growth has proven robust and sustainable over the past year, increasing its share of UK retail from 10p in the pound to 15p. Whilst we are yet to see high street sales decline there can be no doubt online is growing its share at the expense of bricks and mortar retailers and we believe that this trend will continue.”
The retail sector
December’s e-retail sales were nearly 50% higher than last year’s, although demand for online shopping tailed off significantly towards the end of 2007 with December’s Index only 0.2% higher than November’s, reflecting the credit crunch across the UK economy.
Peaks and Troughs
The data, collated by IMRG and analysed by Capgemini’s consumer retail team, reveals that peak online shopping occurred in the first week of December where there was a 9% increase in all online sales. This is later than in previous years, indicating that consumers are making the most of pre Christmas discounting and delaying purchases until the onset of the sales.
The final week of the year only saw a reduction in online sales of 4% (compared with -22% in the previous year) suggesting a tendency to go online to spend Christmas money and vouchers and hitting the online sales post Christmas rather than the high street sales. Clothing increased by 13% in this final week and electrical items by 4%.
Following the lead of US traders in 2006, several leading retailers, including Marks & Spencer, Dixons and Comet, ran online sales promotions on Christmas Day itself, attracting significant levels of business while the high street shops were shut. Four million people shopped online on Christmas Day 2007, spending an estimated £84 million, an average of approximately £21 each.
Sector winners and losers
The largest sales growth can be seen in the specialist e-retail sectors e.g. the electronics sector saw sales growth of 60% in December 2007, indicating that online is increasingly taking the lead. The clothing sector shows a 28% increase on the same point last year and the beers, wines and spirits sector shows over a 20% increase.
Our research shows that the retailers who have both a high street and an online presence seem to have done better than the ‘pure-plays’, so the Multichannel strategy seems to be paying off. We have seen strong results from retailers such as John Lewis and Sainsbury’s, who have spent time and effort revamping their website and addressing their supply chain delivery capability. Interestingly, the M&S online channel grew 78% while reported high street results were disappointing.
With the online sector developing so quickly, it seems that just having an online presence is not enough. Retailers need to meet ever growing customer expectations with recent research by Capgemini suggesting that 1 in 2 would now like a personalised shopping experience. In addition, a customer who bought something online will now expect to collect and exchange it in the high street shop, with a comparable shop and online offering.
Anthoula Madden, Vice President at Capgemini UK’s Consumer Products and Retail Team says “Online retailing is developing so quickly that those who do not yet have an online presence really will get left behind. A ‘joined up’ customer experience across channels seems to be capturing the hearts and minds of consumers as John Lewis have demonstrated, with loyalty to the brand being part of the equation. The Capgemini ‘Future Consumer study’ indicated that only 50% of consumers are interested in just the product, with the majority valuing the overall online experience. We are now seeing established e-retailers developing their retail offering to personalise the customers shopping experience by using the insights gained across channels to better tailor their consumer interactions”
James Roper CEO of IMRG, said: “Consumers are making the most of the 24/7 convenience and competitive pricing that online shopping has to offer. Why would you fight the shopping crowd to buy a TV on the high street when you can arrange for it to be delivered to your home, at a time that suits you and often at a more competitive price? Consumer behaviour has changed dramatically over the last few years and really is the driving force behind many of the changes in the e-retail landscape. If retailers intend to be part of the future retail scene, they need to develop a robust online presence, and that is getting harder as the sophistication of channel increases and customers expectations rise”.
Anthoula Madden, Vice President at Capgemini UK’s Consumer Products and Retail Team says, “The latest stats from the IMRG Capgemini e-Retail Sales Index highlight the importance of a multichannel strategy if high street retailers are to compete effectively with their online counterparts. High street retailers have the benefits of brand recognition, robust delivery and distribution channels which can give them competitive advantage – they just need to ensure that they can offer consumers a multichannel experience to capitalise on the ever growing trend for online shopping. ”
Jo Evans, IMRG’s Managing Director says, “Online shopping has become the dynamo of the retail sector, so it is vital that we all understand how it is evolving and why. We now have a much clearer insight into actual online trading patterns than ever before thanks to the combination of Capgemini’s involvement and analysis, together with data from SecureTrading, the UK’s leading independent payment services provider, which is tracking millions of transactions from 1,500 UK e-retailers, and traffic data from the leading digital market research firm, eDigitalResearch, using a sample of over 250 million page views per month from leading UK retailers that have its survey code installed on their web site.”
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Notes to Editors
Quotes from retailers
David Walmsley, Head of Web Selling, John Lewis Direct;
“December built on a very strong November online sales performance with the final weeks before Christmas delivering sales well ahead of expectation. We expect the New Year to present tougher trading conditions but our online channel is still well-placed for growth.”
Chris Murton, Online Business Director UK, Carphone Warehouse;
“This December has been a record breaker for CPW.com. I know this doesn’t happen by accident but as a result of a great team effort so thank you to everyone.”
Dan Mountain, Managing Director of Buyagift.co.uk;
“Growth in e-retail sales alone from December 2005 to December 2006 was 43% so we conservatively estimated 14% for December 2007. Our actual growth from e-retail sales from December 2006 to December 2007 was 31% (over twice our forecast growth). The growth of orders through the Buyagift.com web site was 20% meaning the average order value increased from £68 to £74. Our largest growth day was the 21st of December where we showed 88% growth on the prior year. Despite this continued strong growth we managed to maintain all of our customer service objectives including every call answered within 3 rings, every gift dispatched the same day if ordered prior to 3pm and 100% customer satisfaction. The Buyagift board and team were delighted with our 2007 results.”
Zak Edwards, Managing Director of Prezzybox.com;
“With like for like sales being fairly static throughout the first 3 quarters of 2007, we were fairly unsure of what to expect in the Christmas quarter. However, an aggressive online marketing strategy, together with an improved product portfolio, resulted in 35% growth in quarter 4. What is especially pleasing is that, due to enhanced backend systems implementation and closer working ties with our warehouse, we coped with the exponential growth. It was stressful, but was manageable, which is very satisfying.”
DeVere Forster, Director, Dixons.co.uk;
“In the period before Christmas we noticed a new phenomenon in buying patterns, which we called “e-camping”. Thousands of keen buyers engaged in “e-camping”, mimicking the tradition of camping outside bricks and mortar stores, signing up for e-mail alerts to secure products with limited supply, such as the Nintedo Wii, as new stock arrived on our site. Traditional British behavioural patterns don’t apply online - the door to our store is wide open and the customers who secure the stock are the ones who manage to click their mice milliseconds more quickly than their virtual queuing neighbours. The sort of products customers are looking for on Christmas Day are: TVs, mobile phones, digital cameras, MP3 players, digital photo frames, washing machines, tumble driers, fridges and freezers - and they are often able to snap up sales bargains in comfort, rather than fighting the crowds on the high street on Boxing Day.”
Lastminute.com UK Managing Director John Bevan;
“Christmas Day has become a popular day for people to surf and shop on the web. With the whole family together, there’s no better time to jump on the web to research or book that next holiday. lastminute.com recorded 20% more bookings and 22% more traffic on Christmas Day 2006 than on Christmas Day 2005, and is expecting even more people to visit the site and book a holiday this year.”
Ulric Jérome, Managing Director- Pixmania;
“December was quite hectic; the traffic on Pixmania grew by more than 50% compared to November. The biggest sales days were Monday 17th and Tuesday 18th December. The fact that consumers choose to buy on the internet until the very last minute clearly show that the level of trust on the performance of such distribution channel has reached a very high level. Top sellers this Christmas included “digital photo frames”, large flat panel TVs especially 32” and 40” size, gaming consoles with the continuing success of the Wii, MP3 with the launch of the last ipod generation and the touch range. 35% more women did their Christmas shopping on Pixmania compared to last year; this fact reflects well the democratisation of internet shopping!”
About IMRG (The Interactive Media in Retail Group)
IMRG (Interactive Media In Retail Group) is the industry body 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 have committed 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 co-operative power of its members.
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, which it calls the Collaborative Business Experience. Capgemini reported 2006 global revenues of EUR 7.7 billion and employs 82,000 people worldwide.
More information is available at www.uk.capgemini.com
About the ‘IMRG Capgemini e-Retail Sales Index’
The IMRG Capgemini Index has been going for over seven years and 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.
Approximately 60 e-retailers regularly contribute data to the IMRG Capgemini Index, including;
Airport Parking & Hotels Ltd, Ancestral Collections, Arcadia Group, ASOS.com, Avon Cosmetics, BeCheeky.com, Berry Bros. & Rudd, Boden.co.uk, Boots Direct, Buyagift.com, Carphone Warehouse, Cloggs, Comet, Co-operative Group (CWS), Co-operative Travel, Comet, Crocus.co.uk, dabs.com, Daxon, Debenhams, e-flowersUK.co.uk, EmpireDirect, Figleaves.com, Firebox, Furniture123, Game.net, GreatValueJewellery.com, Greenfingers.com, Interflora, I Want One of Those, J D Williams, Jason Shankey, John Lewis Department Stores, La Redoute, lastminute.com, Littlewoods Retail, Lookfantastic.com, Made in Sheffield, Marks & Spencer, Mothercare, Next, Otto UK (Freemans, Grattan, Kaleidoscope), PetPlanet.co.uk, Pixmania, Prezzybox.com, QED-UK, QVC, R C Roland, Redcats UK, Shoe-Shop.com, Shop Direct Group, Skinstore.com, Tesco.com Wine, Tesco Electrical, The Sunday Times Wine Club, TUI UK, United Co-op, Vertbaudet, Waitrose, Widget