Online retail enjoys strong start to year

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UK online retail sales were up 13.9% year-on-year (YoY) in January, according to the latest figures from the IMRG Capgemini e-Retail Sales Index.

With rainfall above average in January, and the lowest January high street footfall recorded in five years, consumers turned to online shopping this January. Even the expected post-Christmas month-on-month (MoM) decline in sales from December to January, which came in at -20.4%, was less than the five-year average of -24.1%.

The electricals sector performed especially well online relative to recent trends, growing 4.4% YoY. Its performance sits starkly against last year’s 12 month average (Jan17 – Dec17) of -3.0% YoY and January 2017’s YoY growth figure of -8.5%.

This solid start to the year was secured in spite of a dip in the overall market conversion rate to 4.3% from 4.5% last year, continuing the decreasing trend as customers browse more before purchasing. Sales via smartphones are also increasing at a lower rate than last year, at 39.3% YoY in January, while growth through tablets suffered a decrease in YoY growth of -10.0%.

IMRG managing director Justin Opie commented: “14% growth for January represents a strong start to the year, arguably even surprisingly so. The economic climate remains challenging, with inflation remaining at 3% and an interest rate rise anticipated over the next few months.

“The impact on retail was very apparent in January, with several very large retailers announcing store closures and job cuts – high street footfall also fell to a five-year low for January. Yet online appeared to benefit from that, with the index recording the lowest month-on-month decrease (-20.5 %) between December and January in five years. It may be that, as we enter 2018, we are seeing signs of an acceleration of the general move over to online, putting pressure on those retailers with large store portfolios to sharpen their focus on rolling out their digital strategy.”

Capgemini principal consultant in retail customer engagement Bhavesh Unadkat added: “Electricals’ grew by 4% on the year; the optimist will position this as a good start to 2018 compared to the declining 2017 performance – it’s proven if electricals does well then other categories usually follow. The pessimist will argue this performance was delivered through overstocks from peak and heavy discounting in January.

“I think it is a mixture of the two; heavy discounting did continue in January for core electricals but the rise in products available for exercise and voice assistance like Alexa has helped deliver growth to this category. Multi-channel retailers had a significantly higher transaction value than online proving how customers across certain categories like the human touch and engagement with products and staff before committing to a purchase.”

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