Date:15 April 2011
March Index results confirm strongest Q1 growth in 3 years
• £5.1 billion spent online during March; equates to a year-on-year increase of 14%
• Q1 2011 sees Index grow 18%, strongest first quarter growth since 2008
• Health and beauty products up 32% as Brits jump online for Mother’s Day treats
• Travel sector sees a year-on-year decline for the first time since January 2010
As the high street reports the worst drop in sales for 15 years, the latest figures from the IMRG Capgemini e-Retail Sales Index reveal that online sales are bucking the trend by recording continued growth. In March, shoppers in the UK spent a total of £5.1 billion online, 14% more than March 2010 and equivalent to £82 per person. Significantly, the Index has seen 18% growth during Q1 compared with the same period last year, which confirms it as the strongest first quarter performance in three years.
With the health and beauty sector (which includes perfume and make up) rocketing up 20% from February, and 32% year-on-year, the Index revealed the impact that Mother’s Day had on online sales. Although March was not a particularly strong month for the gifts sector, it did see a 55% leap during the week before Mother’s Day, suggesting that when it comes to treating mum, Brits are still seeking a bargain.
Interestingly, despite a very strong start to the year, the travel sector took a nose dive in March, plummeting 15% on February and down 2% compared with March 2010. This is the first time the sector has declined year-on-year in over 12 months. This drop could be attributed to several factors. A later Easter would have certainly been an issue, as last minute travel deals would have been put off until mid-April. However, the Budget, announced on 23rd March, is likely to have been the major contributing factor, as consumers tightened their belts in the run up to, and in the wake of, the Government’s severe austerity measures. This is also reflected in the drop in other big-ticket sectors, such as electrical goods, which saw an 8% decline from February.
Tina Spooner, Director of Information at IMRG comments: “The Index reveals an encouraging performance for the e-retail market during March and confirms that online continues to be the beacon for the UK retail market during these tough economic conditions, with the high street suffering its worst drop in sales for 15 years during the same period. The 18% annual growth recorded in the first quarter of 2011 is in line with our prediction for the year.
“IMRG’s recent online confidence survey revealed that over 70% of UK retailers expect online sales to remain healthy for the remainder of the year which, when combined with the solid growth recorded by the Index, indicates that the outlook for 2011 remains positive for the UK e-retail industry.”
Chris Webster, head of retail consulting and technology at Capgemini says: “March was a solid month for online retail; 14% annual growth is a healthy result and quite a contrast to the reports from the high-street. The 18% growth in the Index during Q1 is indicative of a new trend. Consumers are indeed tightening belts, but they are still shopping, and have simply become more strategic in their buying habits.”
The ever-widening gap between multi-channel and online-only retailers continued to increase in March. Those with both a high-street and online presence witnessed a 19% growth on average compared with March last year, while online experienced just 6%.