Early Easter rounds out quarter of significant online retail growth

As the high street reported the steepest year-on-year drop in footfall since 2010, UK online retail sales grew by 18.9% year-on-year (YoY) in March, according to the latest figures from the IMRG Capgemini e-Retail Sales Index.

A number of key factors helped drive the month’s online sales – starting with the continued cold weather from the ’beast from the east’, and ending with the early Easter bank holiday. Far more significant of the two, weekly analysis showed that growth doubled in the final week over Easter – doubling from +13% to +27%.

Electricals were among the categories to see a very strong month online, reversing a five-year trend of decline to record growth of 21.9%.

IMRG strategy and insight director Andy Mulcahy commented: “It’s possible to read this month’s results as a simple story of online continuing to benefit from the decline of the high street – which is nothing new of course, but it may be that we are seeing an acceleration of this as we’ve moved into 2018. At the same time it could just be a blip – Easter falling in March will likely have pushed up online growth (and, by extension, it may come in far lower in April) plus the weather has at times brought heavy snowfall and prolonged rainfall.

“If the strong growth is sustained into April, it would be tempting to conclude that we may have entered a new retail era – where store portfolios are going to be reduced faster under a far more radical programme of store consolidation than we have seen thus far, with digital transformation going high up board agendas and more ‘digital transformation director’ job titles appearing. But what does that mean for the high street? It’s important to remember that shopping centres have generally performed better than high streets recently, so it’s not that physical retail spaces can’t work. The question is – if retail were to start again entirely from scratch tomorrow, what would a retailer’s physical space look like? Would they be shops in the traditional sense, using all the space to market stock? Would we actually even create high streets again?”

Capgemini principal consultant in retail customer engagement Bhavesh Unadkat added: “While the comparatively stronger growth of multi-channel retailers this month further supports the weather’s role in driving footfall away from the high streets, it also highlights the potential value and relevance of maintaining some form of physical presence in addition to a digital one. The trick for retailers is to figure out how the two can successfully work in combination, and what role each must play. We’re already seeing the start of this interplay in the trend for showrooming, but that is just one possible innovation of many.

“Regardless of a probable uptick in high street sales as the months warm up, this isn’t a calculation retailers can afford to push to the back of their minds till Autumn. Not only is the British weather far too unreliable for such optimism, but all the signs point to this being part of a much more intrinsic change in consumer behaviour that continues to gather pace. For those retailers who fail to evolve their approach fast enough, the gap in fortunes is only going to widen.”