Online shopping continues to grow in the UK, with £5.3 billion spent online during May; a year-on-year increase of 18%. However, Brits are preferring to make lots of small purchases rather than big investments, according to the latest data from the IMRG and Capgemini.
The latest figures from the IMRG Capgemini e-Retail Sales Index have revealed continuing strong growth for online sales in May, with shoppers in the UK spending a total of £5.3 billion online, an impressive 18% more than May 2010, up 2% on last month and equivalent to £86 per person.
To date, £25.7 billion has been spent online during 2011.
This strong performance for online shopping in sharp contrast with figures released by the British Retail Consortium earlier this month, which showed that, despite a surge in sales during the Royal Wedding and Easter celebrations, the high street put in a very weak performance in May; -0.3% year-on-year and down 2.1% on April 2011.
The sustained growth in e-retail sales is largely being driven by the sectors selling low-ticket products, such as clothing and alcohol, while the sectors with higher-ticket products are lagging behind by comparison.
Brits’ party spirit still in full swing
Although the weather took a turn for the worse last month, with much of the UK reporting dismal conditions in May, it seems that the British party sprit couldn’t be dampened, with alcohol sales jumping 25% year-on-year, and up 5% on April.
The average basket value for alcohol sales in May was an impressive £161, the second highest value since November 2007 and quite a difference to the £85 average spend in May 2010.
This surge in alcohol sales is supported by the results posted by Majestic Wines Plc on Monday, which reported pre-tax profits of 27% and prompted the company to announce plans to double its size.
The clothing sector also had an impressive month with year-on-year figures jumping 24% in May. It seems that whilst earlier reports from the high street indicated clothing was one of the worst hit sectors, consumers were more than happy to jump online in preparation for the anticipated warmer weather.
Cost of a holiday goes sky-high
After a very poor start to the year, the travel sector has welcomed a return to growth, albeit only just, with a 12% increase on May 2010 and a 13% rise on April’s figures. The average basket value has also seen an increase; in May last year the average online travel spend was £669. In May 2011, the cost has risen two hundred pounds to a staggering £869.
Two likely factors for this are the huge hike in flight taxes introduced in November last year and an increase in ticket prices as airlines look to recoup losses suffered during the recession.
Chris Webster, head of retail consulting and technology at Capgemini says: “May was another strong month for online retail with sales jumping 18% on this time last year.
“May also highlighted some interesting trends in shopping behaviour. Whilst the high street suffers in the wake of the struggling economy consumers continue to migrate online. However, it is important to note the emerging disparity between the big ticket items, such as travel and electrical goods, and the less expensive items, like clothing and alcohol. As economy suffers, expensive purchases are increasingly seen as discretionary. By omitting the travel sector from the figures, the year on year growth increases to an even more impressive 21.5%.”
Tina Spooner, Director of Information at IMRG comments: “Online is continuing to set the pace in retail, with both clothing and alcohol e-retailers performing particularly well in May and boasting annual growth year-to-date of more than 25%. Overall, since January the Index has grown 18% year-on-year, which is in line with our forecast for 2011.
“However, we are seeing a pretty clear split between the sectors selling low-cost products and those selling high-value ones, with travel, electricals and home and garden lagging some way behind in terms of growth. So although overall growth is very positive, it seems perhaps consumers are wary about making those big-ticket purchases in the current economic climate.”
The results have illustrated another potential trend. Multi-channel retailers, those stores that have both a high-street and an online presence, such as John Lewis, have reported an average of 23% growth on May 2011 and up 5% on last month.
Online only retailers (figures include catalogue sales) however have only seen 9% year-on-year growth and a 2% decline on April 2011. The cause of this is unclear, but it is unusual for multi-channel and online only retail sales to diverge mid-year; it is a trend more common around Christmas.
http://www.imrg.org/
www.capgemini.com.
