Bumper online Christmas

| Press release
£4.67 billion spent online in December despite credit crunch slowing growth, according to latest IMRG Capgemini e-Retail Sales Index

Shoppers turning to web to beat recession – around two-thirds spent more online this Christmas.

New figures from the IMRG Capgemini e-Retail Sales Index show that UK shoppers spent over £4.67 billion online in December – an equivalent of £76.67p  for every person in the UK – 14.2% up on December 2007. 

Monthly growth fell for the first time since December 2002 with consumers spending 1.5% less online than in November. This is attributed to record high sales in November, which saw higher than average yearly growth, and the timing of Christmas 2008 where the peak shopping weekend fell on 29th and 30th November.

Supporting research from Capgemini reveals that shoppers are turning to the web to beat the credit crunch, showing how online spend can continue to grow despite static or falling growth on the high street. Whilst traditional factors such as researching the best prices online were reported by almost half (44.35%) of the 2,000 consumers surveyed, it is clear online retail is now part of mainstream shopping behaviour. A third of shoppers (37%) did more than half of their shopping online, with nearly two-thirds (59.9%) spending more online this Christmas than last year. 

Sector splits
Consumers looking to stock up on alcohol for Christmas celebrations turned to the internet for the best bargains spending 13% more in December compared to November. Gifts and electricals also saw a marked increase in sales for December – where shoppers spent 7% and 5% more respectively. Although clothing, footwear and accessories saw flat growth compared to November, shoppers spent 32% more compared to December 2007. In contrast, the lingerie and health and beauty sectors saw a decline in sales both month on month and year on year.

IMRG and Capgemini have also calculated the average online spend Average Basket Value (ABV) to reveal consumer’s average spend per order online for each sector in December.

Sector

Monthly change in IMRG Capgemini Index

Annual change in IMRG Capgemini Index

Average online spend in December

Beers, Wines and Spirits

+13%

-16%

£67

Gifts

+7%

-1%

£44

Electrical Sector

+5%

+7%

£136

Clothing

0%

+32%

£57

Lingerie

-13%

-11%

£22

Health and Beauty

-13%

-4%

£38

 

Clothing, footwear and accessories is the fastest growing sector – it has consistently outperformed the total market and other sectors throughout 2008. Although the total market for online spending has experienced slowing growth, the clothing, footwear and accessories sector has seen around 30% year on year increases every month for 2008. Capgemini’s polling also debunks the myth that a significant proportion of online garment sales can be attributed to shoppers ordering multiple sizes to return those that do not fit. In fact only 21% of consumers often or always do so. This may relate to the inconvenience of returning items with 20% of online shoppers stating this discouraged them making more purchases online. More shoppers (24%) were put off by the inability to handle items to check quality which trumped worries over security (13%) and the unreliability of delivery services (13%).

Mike Petevinos, Head of Consulting for Retail for Capgemini UK, said: “This is the first recession we have seen where online will play a significant role in mainstream spending. Our research provides further evidence that consumers are turning to the internet as the most efficient way to save money in the downturn. It is also clear that retailers are seizing the potential of the internet to reach shoppers with targeted discounts and promotions. These factors have led to the robust growth rates we are seeing for e-retailing as a whole.

James Roper, Chief Executive and Founder of IMRG, said:
It is becoming apparent that the recession is accelerating the rate at which the internet is impacting the retail sector.  The traditional retail model in which stock is held in an outlet for collection by the consumer is giving way to a hybrid model that emphasises the store’s role as a display area and leisure destination, and the value of both these aspects diminish in a recession.  Brands that are nimble in a cross-channel environment give their customers a more efficient, easy-to-use service and are rewarded with increased conversion rates and larger average shopping baskets.  So it’s good to see more and more retailers participating in the Index, as it gives us a clearer view of the market’s dynamics as well as providing them with key intelligence with which to tune their performance.

For further information please contact Capgemini’s UK PR agency:

Luica Mak – 020 7025 6408 (Luica.mak@redconsultancy.com)

Ryan Larnach – 020 7025 6560 (Ryan.larnach@redconsultancy.com)

Melissa Au – 020 7025 6417 (Melissa.au@redconsultancy.com)

Notes to Editors
2008 overall review
The Index reveals that overall online spending in 2008 reached record levels for each individual month with November seeing the highest sales. However, the year on year in growth has fallen, showing that online is still experiencing growth but at a slowing rate. The latest figures show that the first week of December saw a slight decrease in online spending and this downturn sharpened week by week in run up to Christmas as the credit crunch began to bite. The fall in monthly growth is further accentuated as November saw particularly high online sales.

November 2008 the IMRG Capgemini e-Retail Sales Index was up 25.7% month on month, this compared to an increase of 13% in the high street (according to the ONS Retail Sales Index (RSI)). Year on Year growth of the ONS RSI has hovered around 0% in the second half of 2008 compared to 16% in the IMRG Capgemini e-Retail Sales Index.

About IMRG
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.

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 Experience - and through a global delivery model called Rightshore®, which aims to offer the right resources in the right location at competitive cost. Present in 36 countries, Capgemini reported 2007 global revenues of EUR 8.7 billion and employs over 88,000 people worldwide.
More information is available at www.uk.capgemini.com.

About the ‘IMRG Capgemini e-Retail Sales Index’
The IMRG Capgemini Index 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 seventy e-retailers regularly contribute data to the IMRG Capgemini Index, including: Airport Parking & Hotels Ltd, Adili.com, Arcadia Group, ASOS.com, BeCheeky.com, Blacks, Boden.co.uk, Boots Direct, Brora, Buyagift.com, Carphone Warehouse, Charles Tyrwhitt,  Cloggs, Comet, Co-operative Travel, Crocus.co.uk, Dabs.com, Damart, Daxon, Debenhams, e-flowersUK.co.uk, EmpireDirect, Ethical Superstore, Figleaves.com, Firebox, First Choice, Furniture123, Gadgets.co.uk, Game.net, Gameplay.com, Getting Personal.co.uk, GreatValueJewellery.com, Greenfingers.com, Interflora, I Want One of Those, JD Sports, J D Williams, Jason Shankey, John Lewis Partnership, La Redoute, lastminute.com, Lighting-Direct, Lookfantastic.com, M and M Direct, Made in Sheffield, Marks & Spencer, Millets, Naked Wines, New Look, Next, Otto UK (Freemans, Grattan, Kaleidoscope), PetPlanet.co.uk, Pixmania, Prezzybox.com, QED-UK, QVC, R C Roland, Redcats UK, Richer Sounds, Shoe-Shop.com, Shop Direct Home Shopping, Schuh, Serenata Flowers, Tesco.com Wine, Tesco Electrical, The Fragrance Shop, The Jewellery Channel, The Sunday Times Wine Club, TUI UK, Turton Wines, Vertbaudet, Virgin Vie at Home, Waitrose, Wilkinson Hardware.

Quotes from retailers:

Robin Terrell, Managing Director of John Lewis online said:
Online sales in December grew stronger as the month progressed. Sales were strong across the breadth of our product ranges with toys, gadgets and gifting all naturally performing strongly. Best-sellers included Biscuit the animatronic puppy, iPod docks and speakers, and fashions. This year we kicked off our Clearance sale online on Christmas Eve for the first time ever and the results were very strong. We saw good sales through Christmas Eve, with a record peak in visitors to the site, and then through Christmas Day with the busiest hour being 9-10pm. Lots of customers were browsing, we believe to help them plan their shopping trips into our stores.

Andrew Ellison at Schuh said: “Online sales were well beyond our (cautious) expectations during the festive period, with an increase over the same period last year of over 30%. Our busiest day online in terms of visits to our web site was on Boxing Day and we also saw a substantial increase in visitors on 22nd December when we launched our online sale.

Sarah Blair Gould, eCommerce Manager at Boden, said: “Trade in the run up to Christmas was in line with our expectations, which was good considering the tough trading conditions. Web traffic was up 37% year-on-year for December and our busiest day was December 12th which was our Sale launch day.

Christian Robinson, Managing Director of Firebox.com said: “December 2008 was an exciting month for Firebox. Monday the 8th December saw a record number of orders (in terms of volume and value) in the ten years since we began trading. Our peak day for traffic during 2008 was in December and in addition, sales were up on 2007 and were higher than expected over the Christmas period.

Rowan Gormley, Founder of Naked Wines said: “Despite the credit crunch, people are buying wine, but they are buying more intelligently. Over 50% of our new customers in our first month of trading agreed to sponsor a winemaker, in return for a third discount on their wines.

Steve Robinson, Chief Executive of M and M Direct, commenting on Christmas trading, said: “The business did extremely well over the Christmas period against a strong comparative. Customers in these difficult times are embracing the internet and wanting great value products. Looking forward to 2009 we believe we are well positioned in a challenging market to offer our customers a continuing great range of products at great prices and it will be those retailers that manage to deliver value for money that will continue to grow.

Shop Direct Group Chief Executive Mark Newton-Jones said: “We are pleased with our trading performance during the Christmas period and particularly with the continued growth of our online business as this becomes the shopping channel of choice for many of our new and existing customers. We believe the retail outlook in 2009 will be difficult. However, we will continue to invest in and improve our broad range of products, our online platform and our customer service, whilst continuing to offer our customers flexible payment terms.

Gary Berg, Managing Director at Lighting Direct, said: “Sales for December were lower than the previous year by approximately 10%. However the number of orders received was almost identical to last year which shows that in our market sector customers are still buying but spending less.  The traffic and sales figures for Christmas Day and Boxing Day year on year were similar.