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Published
May 18, 2018
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Sunshine lifts UK e-tail as consumer shopping shift accelerates

Published
May 18, 2018

The high street may have struggled last month but online retail fired on all cylinders with e-sales up 18.8% year-on-year, according to the latest figures from the IMRG-Capgemini e-Retail Sales Index. That was an acceleration of growth, with the three-month figure averaging out at a 17% uplift, while the rise was just under 14% for the last six months and a little over 13% for the latest 12 months.


Warm weather helped fashion sales online last month



It was the highest annual increase since November 2016 and came in despite Easter falling in March this year.

Did fashion benefit? Well, electricals shone with a 20.9% increase and fashion couldn’t beat that rate. But clothing still managed a 15.6% rise, which must have cheered all those pureplay e-tailers as well as the huge number of omnichannel players who hoped their online ops would make up for weak physical store trade.

That said, there was a fall in the overall market conversion rate (down to 4.15% from 4.3%) marking the fifth consecutive decline this year. IMRG said this is likely to be due to the increasing penetration of sales made through smartphones, which have lower conversion rates generally. But if it also means overall online browsing activity is higher, it’s still good news. And that’s borne out by the fact that average basket values (ABV) increased – jumping by £14 (month-on-month) to £117.12 for multichannel retailers, and by £3.50 to £87.16 for online-only.
 
April featured the first really warm weather of the year, which may have had an impact on almost all sectors seeing growth in April, hence that clothing category increase. We've already heard from John Lewis how warmer weather has lifted sales and especially for sunglasses.

Andy Mulcahy, strategy and insight director at IMRG said: “Growth in online retail sales revenue has been markedly higher than expected throughout 2018 so far. One reason is likely to be related to a turnaround in economic fortunes – while inflation outstripped wage growth for most of 2017, the gap has closed in recent months and wage growth was actually higher than inflation in March 2018. This means that, on the whole, UK shoppers should be feeling a bit more confident in making purchases."
 
But he said it’s very apparent that it’s online retail that’s benefitting from these changes in consumers’ economic circumstances while physical store simply aren’t seeing an uplift. 

“Up until now, there have been multiple reasons to suspect that this split in performance may have been influenced by various external – and therefore temporary – factors: the above-average rainfall in January, the snow in February/March, Easter being early this year. The fact that April 2018 is comparing against an April last year that included Easter – with the boost to retail that it typically brings – suggests that this is not a blip. As shoppers have started to find themselves with a bit more disposable income in 2018, we are possibly witnessing an acceleration in the shift of shopper behaviour over to online.”

So is that a bad thing? Yes, if you work in a physical store or have a large estate of expensive stores. But Mulcahy also said: “Much of the coverage of the downturn on the high street sees it as a negative development – but actually shoppers are still shopping as much as they did before, it’s not retail that is suffering; it’s just undergoing a digital transition at a far faster pace than was previously the case.”

Meanwhile Bhavesh Unadkat, principal consultant in retail customer engagement, at Capgemini, added that while electricals were the biggest winners last month, it wasn’t all about TVs and vacuum cleaners. “This links to a bigger picture as consumers are adopting more technology as part of their everyday life. Voice assisted technology is the primary driver of smart technology in the home, wearable technology such as health and fitness devices is increasing in popularity, and further innovations in home security and entertainment give a taste of upcoming trends in 2018.

“While retailers benefit from the sales performances it also serves as a reminder that as the integration of technology gathers pace for the consumer it challenges retailers to reflect this in their own customer experiences.”

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