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UK online retail on the rise, boosted by the World Cup and beating the weather

Online retail has enjoyed a 16.8% (YoY) growth during the first half of 2018, defying extreme weather events like the Beast of the East and various heatwaves to record strong sales results every month so far, according to the Capgemini IMRG eRetail Sales Index.

This sits in stark contrast to the sustained downturn recorded on the high-street so far this year (Feb-Jun). H1 2018 e-retail has in fact seen the highest average H1 year-on-year growth since 2011, above the 5-year-average of 14.1%. The H1 average basket value was also at its highest for the decade at £94, and again outshines the 5-year-average of £85.

Despite the UK being hit by freak cold weather moving into Spring, online retail grew by 15.3% (YoY) between January and March, with the reduced high street footfall driving shoppers to home spending. However as the weather picked up and the UK experienced some unseasonably hot weather in April, online retail sales went from strength-to-strength, with a 18.2% (YoY) growth between April and June.

Some sectors appeared to particularly benefit from the unpredictable weather. Garden enjoyed a YoY growth of 24.9% overall, its strongest first half since 2014, with a 33.7% growth in the warm months of April – June. Clothing has enjoyed consistent growth during the year so far, recording 16.3% growth (YoY) in Q1 and 17.8% (YoY) in Q2 for an average of 17.1%. Health & Beauty experienced its best growth during the wintry months of Q1, with 18.6% growth (YoY). It was also strong during Q2 (16.8% YoY) to give it an overall growth of 17.7% (YoY) for 2018 so far (Jan-Jun).

Despite the impressive growth of online retail, conversion rates for online retailers actually decreased overall every month other than May. This could be accredited to the continued trend of online shopping via smartphone devices, which are accounting for a larger share of total online sales but feature lower (albeit increasing) conversion rates. Indeed, spending via smartphone devices was up 39% against last year during Q2, although growth rates are inevitably starting to slow as this channel reaches maturity.

Andy Mulcahy, Strategy and Insight Director at IMRG, said: “The performance for online sales in the first half of the year has been a lot stronger than anticipated. There are a number of factors that may be influencing that – the extreme weather events (both hot and cold), the Royal Wedding, World Cup etc – and it might be possible that the feelgood elements associated with some of those events has encouraged people to spend a bit beyond their means.

“This could mean that we see a pinch on shopper spend as we move through Q3 – though the weather in July has been incredibly hot – which may lead to an imbalance in online retail growth between the first and second halves of the year.”

Bhavesh Unadkat, Principal Consultant in Retail Customer Engagement at Capgemini, said: “The year started with a lot of doom and gloom and uncertainty around retail. What has been encouraging is how well online retail has performed in H1, particularly in seasonal categories like Clothing and Garden. These two sectors have delivered higher basket values (38.0% and 19.6% YoY respectively), with consumers becoming impulsive in their purchases as they refreshed summer wardrobes and prepared for more time spent outside.

“Despite that online-only retailers outperformed multichannel retailers during most of H1, with average growth at 18.6% and 14.7% respectively, multichannel actually closed the gap on last year’s YOY growth. Basket value growth was also stronger for multichannel retailers, with a 4% (YoY) increase in average basket value to £100.77, compared to only 2% (YoY) for online only retailers at £87.77. It demonstrates the continued importance of an omnichannel presence for retailers – a focus on connected retail will help ensure that the ecommerce sales performance outlasts the good weather.”

‘Next day’ delivery considered most popular for the first time, says IMRG…

An overall growth rate of 18.2 per cent year-on-year was recorded in August in relation to the amount of online retail orders, according to recent data from the IMRG MetaPack UK Delivery Index; indicating that shopper confidence appears to be showing some resilience following the Brexit decision.

Since the EU referendum on June 23, the Interactive Media in Retail Group (IMRG) has tracked an increase in the percentage of orders moving cross-border – which the association claims is most likely down to a sharp fall in the valuation of GBP sterling – and the theme continued in the month of August as 27.8 per cent of orders made in the UK were sent to international destinations.

Furthermore, there was also a notable development in the delivery options that shoppers are selecting. For the first time since the Index’s inception, the percentage of orders using ‘next day’ (36.7 per cent) as the fulfilment option was higher than those using ‘economy’ (33.8 per cent). 

Head of e-logistics at IMRG, Andrew Starkey, said We’ve been tracking a general increase in the percentage of ‘next day’ orders for a while now, and in August it became the most popular option domestically for the first time.”

He continued: “There are a number of factors potentially influencing this – some retailers see delivery as a differentiator and are offering next day as standard, others offer it if the customer’s basket value is above a specific threshold and for others the charge for next day is smaller than it has been on average in previous years. A move toward faster delivery is not unexpected and, for carriers, it doesn’t represent a capacity issue during most of the year – but during peaks such as the Black Friday period, promotion of next day delivery should be handled more cautiously.”

The Index was created with the sole purpose of enabling e-tailers and industry professionals to track a wide range of key benchmark metrics, providing the capability of tracking trends and making informed strategic decisions.  

 

You can view the full IMRG MetaPack UK Delivery Index here 

Sales made via mobile fall for the first time this decade, IMRG claims…

Although many retailers have experienced tremendous increases in the interaction of mobile sales — such as The Entertainer which accomplished a reported overall rise of 120 per cent based on introducing a personalisation strategy to its email marketing platform — new statistics released by the ‘voice’ of UK e-tailing, the Interactive in Media Retail Group (IMRG) has found that sales made via mobile devices have fallen in the first quarter and is the first recorded decrease since 2010.

According to IMRG, the fall is likely to have been influenced by a ‘marked split’ that has recently been recorded in growth rates on tablets and smartphones. As previously documented, while sales through smartphones were up by 83 per cent in April this year, sales via tablet devices hit a record low with a growth rate of three per cent.

Despite the unpredicted fall, chief information officer at IMRG, Tina Spooner, remains optimistic about mobile bouncing back to its continued succession: “While the majority of these sales still come through tablets, shoppers are increasingly using their smartphones in situations where they would previously have used a tablet – the screen sizes have become larger, retailers have focused on optimising the experience for smartphone users and consumers are becoming increasingly confident in using these devices for a wide range of activities.”

Compared to the previous quarter where 51.3 per cent of retail sales were made via mobile, a two per cent decrease to 49.6 per cent was indicated in Q1 2016; as well as a one per cent decline in the number of sales from online retail websites directed via mobile, from 65.5 per cent in Q4 2015 to 64.6 per cent in Q1 2016.