Date:18 October 2011
Online shoppers reward belt tightening with cheaper treats
Q3 results reveal Brits still settling for the little things in life
• September e-Retail sales up 15% over September 2010; up 6% month-on-month
• £5.5bn spent online; £47bn spent online in 2011 to date
• Revised Index growth forecast for 2011: 16% increase on 2010, down from 18%
• Travel sector records lowest quarterly growth since January 2009
18 September 2011: The latest figures from the IMRG Capgemini e-Retail Sales Index have revealed a solid performance in the online sales market for September, with the Index climbing 15% year-on-year (YOY) and equating to £5.5bn spent online. If the travel sector is excluded, the Index grew at 20% YOY. The strength of these results is highlighted even further when compared with the UK high-street, which according to the latest British Retail Consortium sales monitor, grew just 0.3 per cent on last year in terms of value on a like-for-like basis.
Despite a good performance last month, IMRG and Capgemini have reviewed their original prediction of 18% annual growth for 2011, and downgraded it to 16% - equating to a 12-14% increase for the fourth quarter. Although this is still strong, it does show that the rate of growth is slowing down; total growth in 2010 reached 18%.
The sectors that have performed particularly well during September include clothing, home and garden, and alcohol – as ‘small-ticket’ items continue to sell well. Clothing jumped 21% YOY, alcohol 16% YOY, and for the second month in a row, home and garden saw a huge YOY growth of 40%. ‘Big-ticket’ items however suffered, seeing falls for electricals (9% YOY) and travel, which saw a growth of just 4% YOY and a decline of -17% month-on-month (MOM).
Chris Webster, head of retail consulting and technology at Capgemini says: “Reviewing the results in September, at the end of the third quarter, provides us with a good opportunity to assess how the economic turbulence is affecting the shopping habits of British consumers in 2011. It appears that rather than cutting back entirely, we have been more conscientious in our purchases – faced with uncertainty, shoppers are prepared to cut back on luxuries, but not from shopping altogether. Smaller items, such as clothing and items for the home, are considered rewards for our belt tightening, or just more sensible purchases.”
The quarterly results show similar disparity between the ‘low-ticket’ and ‘big-ticket’ items and reveal some interesting trends. Clothing sales have remained consistently strong, reporting growth of 27% YOY in Q1, 29% in Q2 and 23% in Q4. Sales in lingerie have also seen steady quarterly growth this year; 17% YOY in Q1, 28% YOY in Q2 and 29% YOY in Q3. In contrast, the more expensive sectors have been suffering, such as electricals, which has slowed dramatically in the last two quarters, from 18% YOY in Q1, to 8% YOY Q2 and just 2% YOY in Q3. The travel sector has suffered the most thus far in 2011, with Q3 sales up just 2% YOY, the lowest quarterly growth since January 2009.
David J Smith, Chief Marketing & Communications Officer at IMRG, comments: “While consumer confidence in the online market was high in H1 of 2011, with the Index recording growth of 19% on H1 of 2010, there has been a slight dip in terms of the growth levels. We are now forecasting a 16% rise for the market for 2011 as a whole, revised down from our 18% forecast at the beginning of the year, which would equate to around 12-14% for Q4. This will still be an impressive performance, as it is off the back of a very strong Q4 in 2010.
“The tough times for the travel sector are showing little sign of improving any time soon, with consumers focusing on home improvements rather than going on holiday. This is borne out by the strong yearly growth in the home and garden sector, the second consecutive month that it has recorded a rise of 40%. It is clear that both the stagnation in the housing market and the continuing uncertainty over the economic recovery are influencing consumer behaviour in the online market.”