Online shopping dynamo of retail

Online shopping reached an all time high in the run up to Christmas, with £15.2 billion spent online in October to December bringing full year UK e-retail sales to £46.6 billion, up 54% on the £30.2 billion recorded for 2006, according to the ‘IMRG Capgemini e-Retail Sales Index’. Anthoula Madden, Vice President at Capgemini UK’s Consumer Products and Retail Team says, “Online growth has proven robust and sustainable over the past year, increasing its share of UK retail from 10p in the pound to 15p. Whilst we are yet to see high streets sales decline there can be no doubt online is growing its share at the expense of bricks and mortar retailers and we believe that this trend will continue."

December's e-retail sales were nearly 50% higher than last year’s, although demand for online shopping tailed off significantly towards the end of 2007 with December’s Index only 0.2% higher than November’s, reflecting the credit crunch across the UK economy.

The data, collated by IMRG and analysed by Capgemini’s consumer retail team, reveals that peak online shopping occurred in the first week of December where there was a 9% increase in all online sales. This is later than in previous years, indicating that consumers are making the most of pre Christmas discounting and delaying purchases until the onset of the sales.

The final week of the year only saw a reduction in online sales of 4% (compared with -22% in the previous year) suggesting a tendency to go online to spend Christmas money and vouchers and hitting the online sales post Christmas rather than the high street sales. Clothing increased by 13% in this final week and electrical items by 4%.

Following the lead of US traders in 2006, several leading retailers, including Marks & Spencer, ran online sales promotions on Christmas Day itself, attracting significant levels of business while the high street shops were shut. Four million people shopped online on Christmas Day 2007, spending an estimated £84 million, an average of approximately £21 each.

The clothing sector shows a 28% increase on the same point last year.

With the online sector developing so quickly, it seems that just having an online presence is not enough. Retailers need to meet ever growing customer expectations with recent research by Capgemini suggesting that 1 in 2 would now like a personalised shopping experience. In addition, a customer who bought something online will now expect to collect and exchange it in the high street shop, with a comparable shop and online offering.

Jo Evans, IMRG's Managing Director says, "Online shopping has become the dynamo of the retail sector, so it is vital that we all understand how it is evolving and why. We now have a much clearer insight into actual online trading patterns than ever before thanks to the combination of Capgemini's involvement and analysis, together with data from SecureTrading, the UK’s leading independent payment services provider, which is tracking millions of transactions from 1,500 UK e-retailers, and traffic data from the leading digital market research firm, eDigitalResearch, using a sample of over 250 million page views per month.

Image: Trading coin