UK consumers spent a staggering £250 billion shopping online in the last decade. That’s according to the IMRG Capgemini e-Retail Sales Index, which is celebrating its 10th anniversary.
Our love affair with online retail therapy shows no signs of abating, with sales during 2010 alone expected to hit £56 billion.
That figure contrasts sharply with the numbers captured in the Index’s first year. During 2001 UK e-retail sales were just £1.8 billion with just six million Britons shopping online.
The Index’s performance over the last decade tells the story of e-retail success in awe-inspiring numbers. It has grown by 5,772% since launch and continues to track the rise and rise of an industry that still continues to grow, despite the continued challenging economic conditions.
The Index tracks not only the UK’s macro economic picture, with 35% growth during 2006 slowing to 14% during recession-torn 2009, but also the fortunes of individual market sectors.
Peaks in sales of beers, wines and spirits are seen to track the success of the English football team in major tournaments. Sales of clothing online have exploded as rich media imagery has enabled fashionistas to pan, zoom and see items on the body via video clips. Home & Garden is the latest sector to be broken out and will provide insight against the background of the UK’s troubled housing market.
IMRG Chief Executive James Roper said:
“Britons are passionate about shopping online. The combination of ease, convenience and 24/7 access is incredibly compelling. We expect to see that relationship strengthen over the coming decade and by 2020 we predict that the internet will account for half of all retail sales and influence most of the other half.”
Chris Webster, Vice President, Retail Consulting and Technology, Capgemini, commented:
“The change in shopping habits over the last decade has been phenomenal. The internet has become the first destination point for many consumers looking to get the best deals, and retailers have stepped up to the mark by providing extremely compelling propositions. The challenge for the next 10 years will be for e-retailers to increase their share of the market even further and come up with new ways to extend brand loyalty.”
So, what else does the next ten years hold for online retailers? IMRG predicts greater cross-border trading as the UK market continues to mature. With it will come challenges from European legislators, the need to meet different cultural tastes and payment preferences.
Mobile commerce is set to become the defining technological advancement of this decade. Improvements in handsets, browsers, content and data packages mean m-commerce’s time has come.
IMRG and Capgemini predict that the UK’s online retail market will grow by 110% in the next decade, reaching £123 billion by 2020. According to their forecast, growth will slow down to 6% year on year, as the market matures and reaches a tipping point.
Quotes from retailers
Jonathon Brown, Head of Online Selling at John Lewis said: “John Lewis first launched its website in 2000 with 200 products available online. 2001 saw the acquisition of buy.com (UK) and as a result John Lewis Direct was launched with 4,500 products online. Over the next two years televisions, fridges, washing machines and sofas were added to the website assortment and we reached over 10,000 orders in our peak week.
“By 2005 John Lewis Direct had seen over 1 million visits to the website in a week and we started to add product video demonstrations to the site, it was in this year that our full year sales surpassed £100m and on the 26th November 2006 we marked our first million pound day. Over the last three years there have seen incredible developments to the site including the addition of made-to-measure curtains and blinds to the assortment, the launch of click and collect (buy online. pick up instore) and introduction of express delivery (48hr) on white goods.”
Peter Callaway, Director of Ecommerce at House of Fraser said: “Since the launch of the House of Fraser webstore we have seen growth in the online channel which significantly outstrips the overall growth reported by the IMRG Index as a result of being later to have an online presence. This growth continues as consumers become ever more confident in purchasing fashion online and see the House of Fraser webstore as an exciting and inspirational place to shop from the comfort of their home or to just research before visiting one of our stores across the UK.”
Mark Binnington, Marketing Director at Boden said:
“Boden first went online in 2001. It is fair to say that we were sceptical and as luddites ourselves felt that our customers would be to. We were very wrong. By 2004 we had taken over £50m demand online representing 40% of our business. We expected it to stop there. However, by the end of 2009 we had taken almost £200m demand online representing almost 80% of our business. And, it’s still growing.
“The website has gone beyond being a nicer order form for our catalogues. Customers are engaging with Boden in a much different way. They can browse, check stock availability, put outfits together, check fit details, watch videos, see alternative images, read what other customers think and much more. Moving images, high definition images, tons more information, new outfitting tools, together with functionality yet to be invented, will all give scope for our websites to become much better in certain areas than catalogues. And, mobile, iPhones, iPads, etc will change it even further.”
Mark Newton-Jones, CEO, Shop Direct Group comments:
“The past decade has seen a transformation in the way people want to shop. Shop Direct responded quickly to maximise our customers’ move to shopping online and the opportunities this brought us. As a result, we have seen our online sales soar from 18% in 2005 to 60% in 2009 and heading for 70% by the end of 2010/11. It has been an exciting journey and seen us grow through acquisition as well as organically. Bringing the much loved Woolworths brand back online and launching our online department store for fashion and style,Very.co.uk, being some of the many highlights. Customers love giving online feedback and when you’re selling a dress and a pair of jeans every 12 seconds, that’s useful data!
“In the past ten years we have become a multi-channel retailer with over 5 million customers and a turnover of £1.7billion, placing us in the sweet spot of the current e-tailing phenomena. Looking ahead, the next ten years are going to see a dramatic change in people’s shopping habits and attitudes as we all move towards embracing the exciting future that technology and digital mediums create. It will be the norm to shop via your mobile or through your TV as technology merges together. This revolution in technology is here to stay and I’m confident Shop Direct’s focus on innovation means we will be playing a leading role.”
Iain Wilson, Managing Director, UK, Shopping.com said:
“The last decade has seen the web revolutionise the way we live socially, emerging as a more interactive experience. As the online shopping world has grown and consumers have become addicted to its lure, businesses have had to adapt, working to engage consumers – something many companies are still trying to perfect. The next decade will see this move to a new dimension, as businesses create a sense of trust and preference with shoppers. For Shopping.com, this means providing our retail merchants with visual, actionable and data-rich tools, allowing them to deliver accurate, quality data for building an unrivalled service.
“For our merchants, this means increased sales and a great ROI. For consumers, it will improve the shopping experience in three key areas. Reviews will become a ‘must have’ on every product – imagine watching video reviews or instant chat with previous buyers. Alongside this, there will be a growth in the whole ‘personal shopper’ area, with companies like Shopping.com creating an intuitive approach where shoppers can easily find and view accurate information on products they want. And finally, mobile will explode and mature, giving consumers the tools they need to shop wherever, whenever.”
Christian Robinson, MD of Firebox.com comments: “Since its humble beginnings in an attic in Cardiff, Firebox has since grown into a trusted UK e-retail brand - grossing total retail revenues of more than £70m across 2 million orders in the ten years since launch. Over this period Firebox has shipped its range of quirky gifts to 136 countries around the world, with customers in such remote areas as Tierra del Fuego - the southern most city on the planet.” - Firebox has recently announced annual profits of over £1 million.
Zak Edwards, Managing Director of Prezzybox said: “Like the IMRG, Prezzybox launched in 2000 as a one man band, just as the initial “.com” boom was coming to an end! Since then, we’ve grown into one of the leading players in the online gift market with a multi million pound turnover company, attracting over 30,000 users and up to 2000 a day in peak periods. In 2009 we were voted the Retail Website of the Year at the Retail Systems Awards. We’ve seen a lot of competitors come and go, but by and large it’s the same few who launched circa 2000 and who have grown organically and steadily running a lean and sensible business model who have stood the test of time.
“The e-retail market has grown exponentially in the last 10 years and in some ways – with the advent of user generated content, social networking and alternative routes to market inter alia – is unrecognisable from the landscape of 2000. However, the basic principals are the same... We are simply shop keepers who operate online. Our customers, the users, want to buy products for a fair price and receive a good, honest service. I strongly believe that these general retail principals, which have stood for centuries are equally as applicable online today as they have ever been and I believe that if we keep these principals at the forefront of our mind we shall continue to run a successful operation.”
Giles Harridge, co-founder of GettingPersonal.co.uk, says: “We launched our business in November 2005 with the concept of a personalised calendar. It took 16 months to take our first £1M ‘though the till’ - now it barely takes a month. From the addition of personalised notebooks, cards and mugs together with newspaper gifts and experience days, our range offers over 4,000 gifts. We tried some unpersonalised gifts and keepsakes from a little store room at our office and by October 2008 we had opened a 10,000 ft2 warehouse.”
Online retail has grown exponentially in the last ten years and, according to PayPal, has been the fastest growing sector of the retail market in the last two years. It is also forecast to post the largest growth in British retailing, outstripping the wider retail sector, before 2013.
Looking to the future, Cameron McLean, general manager for merchant services at PayPal UK, said: “The face of online retail is set to change considerably in the next ten years as the rise of social media creates a collective shopping power. Our latest research shows over 16 million shoppers (34%) are already creating peer reviews online and 36% usually refer to reviews before making a purchase. Over one in 10 (12%) internet users are already a fan of a brand, retailer or product on a social networking site, such as Facebook and this trend is only going to go up. In response we expect online retail to become a much more collaborative experience for consumers. Just as gaggles of shoppers used to hit the high street on a Saturday, now shoppers will share reviews, highlight great deals and ask their peers’ opinions of purchases at any time of day, via sprawling social networks.
“The other major change in internet retailing over the last 10 years has been the growth of online price comparison. 65% of shoppers compare prices online before buying something costing over £100, but more than one in two (53%) also now compare prices on everyday items, suggesting online retail is set to become even more about ‘getting the best deal available’ than it already is.”
For more information contact:
Flora Hancox – 020 7025 6576 (firstname.lastname@example.org)
Note to Editors:
The IMRG Capgemini Special 10th Anniversary Report is available from IMRG’s web
site - cost £500 + VAT.
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, 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.
Over 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), ASOS.com, Beautique.com, BeCheeky.com, Binends.com, Blacks, Boden.co.uk, Boohoo.com, Boots Direct, Brora, Buyagift.com, BuyItDirect.co.uk, Carphone Warehouse, Charles Tyrwhitt, Clarks, Cloggs, Comet, Co-operative Travel, Crocus.co.uk, Dabs.com, Damart, Daxon, Debenhams, Dobbies, e-flowersUK.co.uk, Ethical Superstore, Figleaves.com, Firebox, First Choice, Freemans Grattan Holdings, Furniture123, Game, Gameplay, Gamestation, Getting Personal.co.uk, GreatValueJewellery.com, Greenfingers.com, Holiday Extras, Home & Cook, House of Fraser, JD Sports, J D Williams, Jack Wills, Jason Shankey, John Lewis Partnership, Ladderstore.com, La Redoute, Lastminute.com, Lighting-Direct, LK Bennett, Lookfantastic.com, M and M Direct, Made in Sheffield, Marks & Spencer, Millets, Monster Travel, Musto, Naked Wines, NaturalCollection.com, New Look, Next, Peacocks, Perfect Handbags, PetPlanet.co.uk, PIXmania, Prezzybox.com, QVC, R C Roland, Redcats UK, Redfoot Revolution, Richer Sounds, Rubber Sole, Rubicon Healthcare, Sainsbury’s, Scales Express, Shoe-Shop.com, Shop Direct Home Shopping, Schuh, Serenata Flowers, Shedstore, Slurp.co.uk, SockShop, Sofa and Home, Sunshine.co.uk, Tesco.com, Tesco Electrical, The Fragrance Shop, The Health Supermarket, The Natural Store, TUI UK, Turton Wines, Vertbaudet, Vie at Home, Waitrose, Wallace Sacks & Wilkinson Hardware