The latest figures from the IMRG Capgemini e-Retail Sales Index have unveiled that annual UK online retail sales grew by 7% in September 2014, the second lowest ever growth rate in the Index and the slowest since 2010.
Key findings:
• 7% year-on-year growth in September; second lowest ever growth in Index
• Clothing sector grew by just 0.3% year-on-year; the lowest recorded rate
• Strong electrical sales continues; grows by 15% year-on-year growth boos
Although an estimated £8.2 billion was spent online, multichannel retailers (retailers with a store presence) have resisted the downward trend more than pureplay retailers (those that are online only), with 8% year-on-year growth in multichannel compared to only 5% year-on-year for pureplay merchants.
This is most evident in the clothing sector which saw sales stabilise against 2013 levels with just 0.3% growth. The lowest ever recorded growth in this sector suggests the warm weather discouraged shoppers from updating their wardrobes until autumn really sets in. However, whilst footwear slowed to 4.5% year-on-year, accessories continued to perform strongly with sales up 48% year-on-year.
On a more positive note, average growth overall in the third quarter reached 13% year-on-year. The electrical sector sustained strong growth of 15% in the same period, likely driven by strong consumer demand for the new iPhone 6 range, launched in September. Furthermore, the home and garden, and alcohol (beers, wines and spirits) sectors have benefited from the warm summer and milder autumn with growth rates of 17% and 16% respectively. Although growth levels are down on last year for both sectors, this is considerably less so compared with the clothing sector and total marketplace as a whole.
Despite the continued migration to mobile commerce, this sector saw the lowest growth rate at 29%, which is a significant drop from the previous all-time low of 36%.
Tina Spooner, Chief Information Officer at IMRG, commented: “The unseasonably warm weather last month clearly had a negative effect on the online retail industry, with apparel merchants in particular seeing a significant impact on sales. As clothing and fashion merchants launched their autumn / winter ranges, temperatures during September reached levels significantly above early autumn averages so it is no surprise that winter coats and boots were not at the top of our online shopping lists. This is not the first time we have seen unseasonal weather having a detrimental effect on e-retail sales, however, on a more positive note, it appears the milder temperatures during September boosted sales of beer, wine and spirits and garden products.
“As we enter the fourth quarter and retailers prepare for the key festive trading period, we expect growth levels to return to the consistent double-digit figures we have seen throughout 2014.”
Adgild Hop, Principal, Head of Retail Consulting at Capgemini, comments: “As is so often the case, weather has once again influenced retail performance this month. Retailers across the UK, but in particular those retailers with more seasonal trade, will no doubt be hoping to recoup some of the lost sales before markdown pressures take over. In addition to lying awake at night worrying about the fast approaching Black Friday and Cyber Monday as the prelude to Christmas, no doubt a lot of retailers will be saying a little prayer to the weather gods.”
Additionally, Adgild Hop comments, “This month has also yet again highlighted the relative strength of multichannel versus online propositions, with a year-on-year LFL (like-for-like) performance for multichannel retailers that is 80 per cent higher that their pureplay online counterparts.”
www.imrg.org