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Electricals sector suffers first September decline since 2003

  • Online retail sales up +14% in September
  • First negative growth for the month of September for electricals
  • September clothing growth strongest in four years

UK online retail sales were up +14% year-on-year (YoY) in September, according to the latest figures from the IMRG Capgemini e-Retail Sales Index. Although this was the third-strongest growth rate so far in 2017, there were signs of macroeconomic pressures influencing shopper behaviour.

The electricals sector suffered its first negative year-on-year growth (-5.6%) for the month of September 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 notably 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 low – up just +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 less necessary purchases. Clothing, on the other hand, saw its highest September year-on-year growth in four years. 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.

Bhavesh Unadkat, principal consultant in retail customer engagement design, Capgemini: “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 6 months.”

Online-only retailers enjoyed their highest ever September conversion rate (6.3%), nearly twice that recorded by multichannel retailers. The online-only retailers are also currently growing at over twice the rate of the multichannel retailers.

Justin Opie, managing director, IMRG comments: “There are several notable differences between the online sales performance of online-only and multichannel retailers. While the online-only retailers are enjoying far higher conversion and sales growth currently, the average spend on multichannel retail sites is much higher. It’s possible that the online-only retailers are benefiting 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. Conversion on multichannel retail sites may also be supressed 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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About the ‘IMRG Capgemini e-Retail Sales Index’

The IMRG Capgemini Index, which was started in April 2000, tracks 'online sales', which we define as 'transactions completed fully, including payment, via interactive channels' from any location, including in-store. 

About IMRG

For over 20 years, IMRG (Interactive Media in Retail Group) has been the voice of e-retail in the UK. We are a membership community comprising businesses of all sizes – multichannel and pureplay, SME and multinational, and solution providers to industry.

We support our members through a range of activities – including market tracking and insight, benchmarking and best practice sharing. Our indexes provide in-depth intelligence on online sales, mobile sales, delivery trends and over 40 additional KPIs.

Our goal is to ensure our members have the information and resources they need to succeed in rapidly-evolving markets – both domestically and internationally.

www.imrg.org 

About Capgemini

With more than 190,000 people, Capgemini is present in over 40 countries and celebrates its 50th Anniversary year in 2017. A global leader in consulting, technology and outsourcing services, the Group reported 2016 global revenues of EUR 12.5 billion. Together with its clients, Capgemini creates and delivers business, technology and digital solutions that fit their needs, enabling them to achieve innovation and competitiveness. A deeply multicultural organization, Capgemini has developed its own way of working, the Collaborative Business ExperienceTM, and draws on Rightshore®, its worldwide delivery model.

Learn more about us at www.capgemini.com.

Rightshore® is a trademark belonging to Capgemini