IMRG Capgemini reports September e-sales rise, fashion is strong
UK online retail sales continued to rise last month, but as we already know, that increase helped to dent visitor traffic to physical stores across the country.
Yet how strong was the rise itself? Was it enough to make up for lower store sales. Not really, although the latest IMRG Capgemini e-Retail Sales Index showed e-sales rising 14% year-on-year in September, which was actually the third-strongest growth rate so far in 2017.
There were signs of macroeconomic pressures influencing shopper behaviour but the news was all good for the fashion sector. Clothing saw its highest September year-on-year growth in four years. That’s perhaps no surprise as a number of retailers have said that consumers bought-into the cold weather clothing offer enthusiastically on the back of autumnal temperatures.
Additionally, September data from the ONS showed that clothing prices rose less sharply than in September last year, which may have helped boost shopper confidence in that sector.
Fashion was in complete contrast to electricals, which suffered its first negative year-on-year September growth (-5.6%) since IMRG started tracking it in 2003. It also marked the sixth consecutive month of negative growth for this sector, which may be experiencing the impact of inflation more than some other sectors due to the relatively high cost of products. Several electrical manufacturers have already signalled that they have had to raise prices in response to inflation, which may be leading shoppers to wait until Black Friday to make more expensive purchases.
Sales growth for the gifts sector was also disappointing with a rise of only 1.9% year-on-year, compared with +33% in September 2016. This may be reflective of shoppers feeling the pressure of inflation and avoiding making non-essential purchases.
Bhavesh Unadkat, principal consultant in retail customer engagement design at Capgemini, said: “While 14% seems high, it hides the impact of inflation. When you look at how much faster online is growing than multichannel it implies that people are currently more price sensitive, comparing deals rather than buying directly through retail.
“Couple this with September’s cross sector spending habits, and it indicates a strong focus on essential purchases, with gifts slowing significantly and electricals continuing to decline. It could in fact be argued that electricals now serve as an indicator of consumer confidence, especially when you pit the sector’s performance against the previous year’s across the last six months.”
Meanwhile IMRG’s MD Justin Opie pointed out that there are several notable differences between the online sales performance of pureplay and multichannel retailers. The pureplay e-tailers are enjoying far higher conversion and sales growth currently. Even though the average spend per transaction on multichannel retail sites is actually much higher, those pureplay rivals are processing many more transactions.
“It’s possible that the online-only retailers are benefitting from the lingering perception that the best deals are available online, so as pressure on their available spend increases, shoppers look to the ‘pure’ online brands over the high street alternatives,” Opie said. “Conversion on multichannel retail sites may also be suppressed by use of store locators and a higher potential for abandoning a basket online, where they were carrying out research, only to complete the purchase in a conveniently-located store.”
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