• £5.9 billion spent online in October
  • Clothing growth recovers after slow start due to  mild weather
  • Travel sales continue to suffer, though average spend breaks £900 barrier for first time
  • £7.75 billion expected to be spent online during five-week Christmas shopping peak

In terms of specific sectors, October has seen a very mixed performance. Online clothing sales were affected by the unusually warm weather[1], with this sector seeing a much later sales spike than is usual for this time of year. Shoppers were put off updating their wardrobes for the chilly winter months as a result of high October temperatures, which soared up to 28 degrees during the first week.

The travel sector is continuing to suffer due to economic uncertainty, with a 17% decline on September’s already very weak result. However, the average spend in October reached £920; the first time it’s broken the £900 mark since the sector was first tracked in December 2008. This suggests that while the majority of Brits are tightening their belts in the wake of the struggling economy, the more affluent consumer is able to accept higher prices to enjoy luxurious holidays.

Other sectors performed better in October however; sales of electrical goods bounced back with a year-on-year growth of 11%, the highest recorded since April 2011. This could be a direct result of heavy discounting from retailers as they look to reinvigorate interest amongst shoppers; in January 2011 the average spend on electrical goods reached £173, compared with just £153 in October.

Other areas that experienced strong sales include health and beauty, which recorded a year-on-year increase of 53%; the highest growth ever recorded for the sector. This further supports the idea that while shoppers are looking to tighten their belts and avoid the more expensive high-ticket items, such as holidays and televisions, they are happy to treat themselves with lower ticket goods.  Alcohol also saw impressive online sales, reporting a significant 27% growth on September 2011 and up 20% on October last year.

The 14% rise recorded for October suggests the Index will meet IMRG and Capgemini’s recently revised prediction that the total market will close the year on 16% annual growth. This result will be helped, in part, by the strong online sales predicted for Christmas – an estimated £7.75bn will be spent during the five-week shopping month of December (starting w/c 28th November), almost half of which (£3.72bn) will be spent in the first two weeks alone.

Chris Webster, head of retail consulting and technology at Capgemini says: “The market is growing in-line with our forecast, but the picture is mixed. Tough economic conditions are hurting retailers in commodity markets, such as electrical, as deep discounting is eroding profits. In other sectors, for example travel, online allows retailers to get ahead of the competition by using innovative strategies reach affluent consumers and make money even in sectors which overall are not performing well.”

Tina Spooner, Chief Information Officer at IMRG, comments: “October’s performance was at the top end of our 12-14% forecast for Q4, so on the whole the outlook is positive. Low-value product sectors are continuing to boom, with accessories up 50% as consumers look to buy bags and belts to complement their outfits rather than replenish their wardrobes, and likewise health & beauty reached a record high of 53% growth. Clothing retailers in general had a slow start to the month; we usually see a peak around the end of September but it actually appeared near the end of October this year. This can be attributed to the very mild weather affecting consumer interest in their autumn ranges.”

October IMRG Capgemini eRetail figures

Industry quotes
Russ Carroll, UK Managing Director of Shopping.com, comments:
Online spending has continued to perform well and we expect this to persist through to the end of 2011 as consumers look online for their Christmas shopping. Once again, clothing has proved a consistently strong category for Shopping.com, increasing by 47% year-on-year and appearing yet again as one of the top items in our monthly barometer of the fastest growing search categories. Lingerie and cosmetics also experienced strong growth at 37% and 20% respectively, with shoes also coming in at 20%. Whilst other higher ticket items have not fared so well, interest in tablets has increased considerably at 372% as popularity in this latest gadget stays strong amongst online shoppers.”

Jason Russel Tanousis of Philip Kingsley Products comments:
Philip Kingsley sales were up approximately 20% on last October, considering sales across all of our online retailers. Being a single brand site with huge online beauty retailers (who sell the PK products) makes life very challenging. But with a new platform, PPC advertising and email marketing there has been cost effective growth in October. We are not surprised the Index recorded such strong growth for the health & beauty sector last month….we have seen this across all the online retailers we sell through.”

Chris Simpson, CMO at Kelkoo:
The results of the October Index points to good news for online retailers as we move in to the key retail Christmas period.  The bounce back for electrical sales last month could suggest consumers took advantage of discounted items for the home in time for the festive period. From our research, online sales are expected to account for almost one fifth of all UK Christmas spending this year, in stark contrast to offline sales which are forecast to fall by 2.1%. It will be interesting to see how the early Christmas sales that retailers have started will affect next month’s index, especially in the clothing and electrical sectors, and we can only hope that consumers buy more products at lower prices as opposed to reducing their overall spend.”

Notes to Editors
About IMRG
IMRG (Interactive Media in Retail Group) is the UK’s industry association for e-retail. Formed in 1990, IMRG is setting and maintaining pragmatic and robust e-retail standards to enable fast-track industry growth, and facilitates its community of members with practical help, information, tools, guidance and networking. Consumers can be confident when dealing with IMRG Members because all interact in an environment where they are encouraged to operate using methods that are Honest, Decent, Legal, Truthful and Fair, and have undertaken to not bring the industry into disrepute. The strength of IMRG is the collective and cooperative power of its members. For more information please visit http://www.imrg.org/ or email membership@imrg.org

About Capgemini
With more than 115,000 people in 40 countries, Capgemini is one of the world’s foremost providers of consulting, technology and outsourcing services. The Group reported 2010 global revenues of EUR 8.7 billion. Together with its clients, Capgemini creates and delivers business and technology solutions that fit their needs and drive the results they want. 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

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.  These sales are predominantly internet-based today, but the Index remains ready to record e-retail sales conducted via whatever interactive channels the market may embrace in the future.

Around one hundred e-retailers now regularly contribute data to the IMRG Capgemini Index, including Airport Parking & Hotels Ltd, Amara, Arcadia Group (Burton, Top Man, Top Shop, Dorothy Perkins, Evans, Wallis, Miss Selfridge), Ask Direct, ASOS.com, Bank, Berry Bros & Rudd,  Binends.com, Blacks, Boden.co.uk, Boohoo.com, Boots Direct, Brandosa.co.uk, Brora, Buyagift.com, BuyItDirect.co.uk, Carphone Warehouse, Charles Clinkard, Charles Tyrwhitt,  Clarks, Cloggs, Co-operative Travel, Crocus.co.uk, Dabs.com, Damart, Debenhams, Ethical Superstore, Figleaves.com, Firebox, First Choice, Freemans Grattan Holdings, Furniture123, Game, Gameplay, Gamestation, Getting Personal.co.uk, Greenfingers.com, Home & Cook, House of Fraser, JD Sports, J D Williams, John Lewis Partnership, Ladderstore.com, Lastminute.com, LK Bennett, Lookfantastic.com, Lyco Direct, M and M Direct, Marks & Spencer, Matalan, Millets, My Tuxedo, Naked Wines, NaturalCollection.com, New Look, Next, Peacocks, Perfect Handbags, PetPlanet.co.uk, Philip Kingsley, PIXmania, Prezzybox.com, QVC, Redfoot Revolution, Richer Sounds, Sainsbury’s, Scales Express, Schuh, Scott, Shoe-Shop.com, Shop Direct Home Shopping (Additions, Great Universal, Kays, Littlewoods, Empire, Woolworths,Very, Isme), Serenata Flowers, Size, Sofa and Home, Sunshine.co.uk, Tesco.com, The Fragrance Shop, The Health Supermarket, The Natural Store, TUI UK, Turton Wines, Waitrose, Warehouse, Wilkinson Hardware & Wynsors World of Shoes.

[1] http://news.bbc.co.uk/weather/hi/uk_revi ews/newsid_9630000/9630305.stm