IMRG Capgemini eRetail Sales Index: Heavy discounting spurs highest online sales growth in 20 months

| News alert
  • Online sales growth of +19% YoY experienced in July
  • Highest YoY growth since November 2014
  • Clothing continues to perform strongly (+22% YoY), alongside home (+50% YoY) and garden (+39% YoY)

London – The IMRG Capgemini eRetail Sales Index has revealed online sales growth of +19% year-on-year (YoY) in July – a 20-month high for the Index, continuing a stronger-than-expected 2016 for online retail.

High discounting by retailers across the board throughout July may have contributed to the strong performance of the Index, with the average basket value of goods purchased online falling from £80.52 in June 2016 to £78.39 a month later*.  This discounting may have been influenced in part by a need to compete with Amazon Prime Day (12 July), with Amazon announcing that customer orders surpassed Prime Day 2015 by more than 60% worldwide.

In a warmer-than-average July** consumers headed online to renew their summer wardrobes. The overall clothing sector grew +22%, while sub-sectors including accessories (+33%), footwear (+24%), lingerie (+31%) and womenswear (+21%) all recorded above average yearly growth. Looking slightly wider, the home sector grew +50% YoY, while the garden sector grew +39%. Indeed, the only sector to decline was beers, wines and spirits, which fell by a marginal -1%.

The Index growth was also, in part, fuelled by a resurgence in sales growth for multichannel retailers, who recorded a growth rate in online sales of +19% – a 13-month high. This was supported by continued strong growth for online-only retailers where sales grew +18% YoY.*

This surprise revival for multichannel retailers follows a sustained period of lower growth compared with their online-only counterparts. Indeed, IMRG and Capgemini reported last month that the gap between the two groups had reached a record-high in June, when growth for the online-only retailers was a full 23 percentage points ahead of the rate for the multichannel retailers, compared with June 2015.

Bhavesh Unadkat, Management Consultant in Retail Customer Engagement Design, Capgemini: “It's great to see that the Index registered such a strong July performance – the biggest growth since November 2014. Impressive sales from the multichannel retailers saw them drive growth and undoubtedly helped the month’s figures. Indeed, many of these retailers had reactive plans in place to match the discounts offered by Amazon Prime Day, which goes some way to explaining the drop in basket value. These low prices spurred high volume sales which ensured double-digit growth. 

“Finally, the figures were also bolstered by an encouraging economic position which increased consumer confidence, alongside, of course, some great weather.”

Tina Spooner, Chief Information Officer, at IMRG: “The strong performance in July appears to have been driven by the apparel sector, where all the sub-categories outperformed the total online market with growth in excess of +20% year-on-year.  While we typically see average transaction values fall during the summer sale period, the latest Index results suggest multichannel retailers were discounting more heavily last month, with this group recording a -6% fall in average basket values from June, while the online-only merchants saw no change in average customer spend.

“Year-to-date, UK online sales growth is ahead of forecast at +15% year-on-year (forecast was for +11%) but, while we anticipate seeing double-digit growth continue during August due to a weak performance for the same month last year, 2016 is proving to be a tough one to predict – particularly given the referendum result and the fact we have yet to record any significant impact from it in the Index so far, while some other economic indicators have already revealed some degree of impact.”

Doug Gurr, UK Country Manager, Amazon: “We were delighted by the positive response by our customers to Prime Day, as they made it our biggest day of the year so far. Prime Day was a record-breaking success for small businesses selling on Amazon, with more than 30% of UK Prime Day deals from independent Marketplace sellers.  Prime Day has become a major annual summer deals day for customers, offering our millions of Prime members in the UK thousands of deals on everything from Amazon’s best-selling Fire TV Stick to great health, beauty, home, grocery, electronics and fashion products.”

*Excluding travel retailers

**https://www.theguardian.com/uk-news/2016/aug/07/july-rainfall-temperature-sunshine-wind-last-months-weather

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