The latest figures from the IMRG Capgemini e-Retail Sales Index have revealed a slowdown in the performance of the online sales market, with year-on-year growth at its lowest level since January 2010.
British shoppers spent £5.58bn online in July; 5% up on the previous month – a modest growth which has been hampered by poor online sales in the travel sector.
The slowing growth comes as better weather saw more shoppers hitting retail parks and the high street rather than staying indoors to do their shopping.
The negative growth in the travel sector is consistent with the industry at large, with many travel companies seeing bookings decline this year.
The collapse of travel firm Holidays 4U compounded a poor summer’s trading as online bookings failed to materialise at the expected rate.
Further evidence of a poor month can be found in the electricals sector which declined 3% compared with the previous year, having grown 17% year-on-year in July 2010.
Overall, the slowing of online growth was counterbalanced by the high-street, which reported a 2.5% month-on-month sales increase in July[1] helped by a food and clothing sales boost. Online, certain sectors did perform strongly such as Home & Garden, which increased 27% year-on-year – this is compared with slow growth last year of only 8%.
The clothing sector continues to expand rapidly, seeing a 25% year-on-year rise as shoppers update their wardrobes for the summer season and take advantage of the sales.
Chris Webster, head of retail consulting and technology at Capgemini said: “The slowdown in July shows the internet is not immune in tough times. Successful retailers will need to expand into multichannel and continue to improve customer experience throughout the online shopping processes. Furthermore, with such a successful first half of 2011, it was a tall order for online sales to maintain such rapid growth.”
Tina Spooner, Chief Information Officer at IMRG, added: “While the Index performed ahead of expectation during the first six months of the year, a slowdown in e-retail growth during the second half was always going to be a possibility. Between July and December last year the Index recorded strong growth, with sales up 21% year-on-year, and therefore over the coming months sales may well be slower, having come from a stronger base last year. However, online retail continues to consistently deliver double-digit growth, despite the retail gloom on the high street.
“With budgets being squeezed and disposable incomes shrinking, it is evident that consumers are making more considered purchases, especially on higher-ticket items, by researching across multiple online channels in order to make their money go further.”
Russ Carroll, UK Managing Director of Shopping.com, comments: “Home and garden sales showed strong growth in July suggesting people were spending more time at home perhaps forgoing a foreign holiday in the difficult financial climate. Clothing also showed strong growth as more and more consumers turn online to find the best fashion deals.”
Simon Walker, Director of Product Management at strategic information management company Stibo Systems, offered his opinion on what retailers need to do to improve e-commerce sales: “Today’s figures from the latest IMRG Capgemini e-Retail Sales Index highlight the importance of a strong multi-channel retail strategy for retailers today. What we are seeing on the high street is being reflected online, with online sales winding down to the lowest rate for 18 months.
Retailers need to consider strengthening their mobile strategies, ensuring that mobile websites are easy to navigate and provide a good customer experience. To encourage purchases and customer engagement, retailers should also view mobile as more than just a transactional platform, offering high-quality content and applications that customers will keep coming back to.
Finally, in order to maximise sales, retailers should think about what product information is displayed across multiple channels. If a customer is not in a shop feeling fabrics or smelling produce, accurate and detailed product information is key to converting browsing into sales. As retailers put more emphasis on multichannel strategies, we may see e-commerce recover over the coming months.”
http://www.imrg.org/
www.capgemini.com.
