• £15.2 billion spent online in 12 week run up to Christmas 2007 according to first
    set of official figures for UK
  • Christmas surge delayed as shoppers wait for online sales
  • Electrical sector proves an online winner

Online shopping reached an all time high in the run up to Christmas, with £15.2
billion spent online in October to December bringing full year UK e-retail sales
to £46.6 billion, up 54% on the £30.2 billion recorded for 2006, according to
the ‘IMRG Capgemini e-Retail Sales Index.’

Within key sectors such as electrical goods, the research indicates that growth
in online sales does come at the expense of high street retailers.

Anthoula Madden, Vice President at Capgemini UK’s Consumer Products and Retail
Team says, “Online growth has proven robust and sustainable over the past year,
increasing its share of UK retail from 10p in the pound to 15p. Whilst we are
yet to see high street sales decline there can be no doubt online is growing its
share at the expense of bricks and mortar retailers and we believe that this trend
will continue.”

The retail sector

December’s e-retail sales were nearly 50% higher than last year’s, although demand
for online shopping tailed off significantly towards the end of 2007 with December’s
Index only 0.2% higher than November’s, reflecting the credit crunch across the
UK economy.

Peaks and Troughs 

The data, collated by IMRG and analysed by Capgemini’s consumer retail team,
reveals that peak online shopping occurred in the first week of December where
there was a 9% increase in all online sales. This is later than in previous years,
indicating that consumers are making the most of pre Christmas discounting and
delaying purchases until the onset of the sales.

The final week of the year only saw a reduction in online sales of 4% (compared
with -22% in the previous year) suggesting a tendency to go online to spend Christmas
money and vouchers and hitting  the online sales post Christmas rather than the
high street sales.  Clothing increased by 13% in this final week and electrical
items by 4%. 

Following the lead of US traders in 2006, several leading retailers, including
Marks & Spencer, Dixons and Comet, ran online sales promotions on Christmas
Day itself, attracting significant levels of business while the high street shops
were shut.  Four million people shopped online on Christmas Day 2007, spending
an estimated £84 million, an average of approximately £21 each.

Sector winners and losers

The largest sales growth can be seen in the specialist e-retail sectors e.g.
the electronics sector saw sales growth of 60% in December 2007, indicating that
online is increasingly taking the lead.  The clothing sector shows a 28% increase
on the same point last year and the beers, wines and spirits sector shows over
a 20% increase.

Our research shows that the retailers who have both a high street and an online
presence seem to have done better than the ‘pure-plays’, so the Multichannel strategy
seems to be paying off. We have seen strong results from retailers such as John
Lewis and Sainsbury’s, who have spent time and effort revamping their website
and addressing their supply chain delivery capability. Interestingly, the M&S
online channel grew 78% while reported high street results were disappointing.

Consumer demands

With the online sector developing so quickly, it seems that just having an online
presence is not enough. Retailers need to meet ever growing customer expectations
with recent research by Capgemini suggesting that 1 in 2 would now like a personalised
shopping experience.  In addition, a customer who bought something online will
now expect to collect and exchange it in the high street shop, with a comparable
shop and online offering.  

Anthoula Madden, Vice President at Capgemini UK’s Consumer Products and Retail
Team says “Online retailing is developing so quickly that those who do not yet have an online
presence really will get left behind. A ‘joined up’ customer experience across
channels seems to be capturing the hearts and minds of consumers as John Lewis
have demonstrated, with loyalty to the brand being part of the equation. The Capgemini
‘Future Consumer study’ indicated that only 50% of consumers are interested in
just the product, with the majority valuing the overall online experience. We
are now seeing established e-retailers developing their retail offering to personalise
the customers shopping experience by using the insights gained across channels
to better tailor their consumer interactions”

James Roper CEO of IMRG, said: “Consumers are making the most of the 24/7 convenience and competitive pricing
that online shopping has to offer. Why would you fight the shopping crowd to buy
a TV on the high street when you can arrange for it to be delivered to your home,
at a time that suits you and often at a more competitive price?  Consumer behaviour
has changed dramatically over the last few years and really is the driving force
behind many of the changes in the e-retail landscape. If retailers intend to be
part of the future retail scene, they need to develop a robust online presence,
and that is getting harder as the sophistication of channel increases and customers
expectations rise”.

Anthoula Madden, Vice President at Capgemini UK’s Consumer Products and Retail
Team says, “The latest stats from the IMRG Capgemini e-Retail Sales Index highlight the importance
of a multichannel strategy if high street retailers are to compete effectively
with their online counterparts. High street retailers have the benefits of brand
recognition, robust delivery and distribution channels which can give them competitive
advantage – they just need to ensure that they can offer consumers a multichannel
experience to capitalise on the ever growing trend for online shopping. ”

Jo Evans, IMRG’s Managing Director says, “Online shopping has become the dynamo of the retail sector, so it is vital that
we all understand how it is evolving and why.  We now have a much clearer insight
into actual online trading patterns than ever before thanks to the combination
of Capgemini’s involvement and analysis, together with data from SecureTrading,
the UK’s leading independent payment services provider, which is tracking millions
of transactions from 1,500 UK e-retailers, and traffic data from the leading digital
market research firm, eDigitalResearch, using a sample of over 250 million page
views per month from leading UK retailers that have its survey code installed
on their web site.”

ENDS

For further information please contact:

 Melissa Au – 020 7025 6417 (Melissa.au@redconsultancy.com)

Justin Bates – 020 7025 6419 (justin.bates@redconsultancy.com)

Notes to Editors

Quotes from retailers

David Walmsley, Head of Web Selling, John Lewis Direct;

“December built on a very strong November online sales performance with the final
weeks before Christmas delivering sales well ahead of expectation. We expect the
New Year to present tougher trading conditions but our online channel is still
well-placed for growth.”

Chris Murton, Online Business Director UK, Carphone Warehouse;

“This December has been a record breaker for CPW.com.  I know this doesn’t happen
by accident but as a result of a great team effort so thank you to everyone.”

Dan Mountain, Managing Director of Buyagift.co.uk;

“Growth in e-retail sales alone from December 2005 to December 2006 was 43% so
we conservatively estimated 14% for December 2007.  Our actual growth from e-retail
sales from December 2006 to December 2007 was 31% (over twice our forecast growth). 
The growth of orders through the Buyagift.com web site was 20% meaning the average
order value increased from £68 to £74. Our largest growth day was the 21st of
December where we showed 88% growth on the prior year. Despite this continued
strong growth we managed to maintain all of our customer service objectives including
every call answered within 3 rings, every gift dispatched the same day if ordered
prior to 3pm and 100% customer satisfaction.  The Buyagift board and team were
delighted with our 2007 results.”

Zak Edwards, Managing Director of Prezzybox.com;

“With like for like sales being fairly static throughout the first 3 quarters
of 2007, we were fairly unsure of what to expect in the Christmas quarter.  However,
an aggressive online marketing strategy, together with an improved product portfolio,
resulted in 35% growth in quarter 4. What is especially pleasing is that, due
to enhanced backend systems implementation and closer working ties with our warehouse,
we coped with the exponential growth. It was stressful, but was manageable, which
is very satisfying.”

DeVere Forster, Director, Dixons.co.uk;

 “In the period before Christmas we noticed a new phenomenon in buying patterns,
which we called “e-camping”.  Thousands of keen buyers engaged in “e-camping”,
mimicking the tradition of camping outside bricks and mortar stores, signing up
for e-mail alerts to secure products with limited supply, such as the Nintedo
Wii, as new stock arrived on our site. Traditional British behavioural patterns
don’t apply online – the door to our store is wide open and the customers who
secure the stock are the ones who manage to click their mice milliseconds more
quickly than their virtual queuing neighbours.  The sort of products customers
are looking for on Christmas Day are: TVs, mobile phones, digital cameras, MP3
players, digital photo frames, washing machines, tumble driers, fridges and freezers
– and they are often able to snap up sales bargains in comfort, rather than fighting
the crowds on the high street on Boxing Day.”

Lastminute.com UK Managing Director John Bevan;

 “Christmas Day has become a popular day for people to surf and shop on the web.
With the whole family together, there’s no better time to jump on the web to research
or book that next holiday. lastminute.com recorded 20% more bookings and 22% more
traffic on Christmas Day 2006 than on Christmas Day 2005, and is expecting even
more people to visit the site and book a holiday this year.”

Ulric Jérome, Managing Director- Pixmania;

“December was quite hectic; the traffic on Pixmania grew by more than 50% compared
to November. The biggest sales days were Monday 17th and Tuesday 18th December. The fact that consumers choose to buy on the internet
until the very last minute clearly show that the level of trust on the performance
of such distribution channel has reached a very high level. Top sellers this Christmas
included “digital photo frames”, large flat panel TVs especially 32” and 40” size,
gaming consoles with the continuing success of the Wii, MP3 with the launch of
the last ipod generation and the touch range.  35% more women did their Christmas
shopping on Pixmania compared to last year; this fact reflects well the democratisation
of internet shopping!”

About IMRG (The Interactive Media in Retail Group)

IMRG (Interactive Media In Retail Group) is the industry body for global 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 have committed 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 co-operative power of its members.

About Capgemini

Capgemini, one of the world’s foremost providers of consulting, technology and
outsourcing services, enables its clients to transform and perform through technologies.
Capgemini provides its clients with insights and capabilities that boost their
freedom to achieve superior results through a unique way of working, which it
calls the Collaborative Business Experience. Capgemini reported 2006 global revenues
of EUR 7.7 billion and employs 82,000 people worldwide.

More information is available at www.uk.capgemini.com

About the ‘IMRG Capgemini e-Retail Sales Index’

The IMRG Capgemini Index has been going for over seven years and 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.

Approximately 60 e-retailers regularly contribute data to the IMRG Capgemini
Index, including;

Airport Parking & Hotels Ltd, Ancestral Collections, Arcadia Group, ASOS.com,
Avon Cosmetics, BeCheeky.com, Berry Bros. & Rudd, Boden.co.uk, Boots Direct,
Buyagift.com, Carphone Warehouse, Cloggs, Comet, Co-operative Group (CWS), Co-operative
Travel, Comet, Crocus.co.uk, dabs.com, Daxon, Debenhams, e-flowersUK.co.uk, EmpireDirect,
Figleaves.com, Firebox, Furniture123, Game.net, GreatValueJewellery.com, Greenfingers.com,
Interflora, I Want One of Those, J D Williams, Jason Shankey, John Lewis Department
Stores, La Redoute, lastminute.com, Littlewoods Retail, Lookfantastic.com, Made
in Sheffield, Marks & Spencer, Mothercare, Next, Otto UK (Freemans, Grattan,
Kaleidoscope), PetPlanet.co.uk, Pixmania, Prezzybox.com, QED-UK, QVC, R C Roland,
Redcats UK, Shoe-Shop.com, Shop Direct Group, Skinstore.com, Tesco.com Wine, Tesco
Electrical, The Sunday Times Wine Club, TUI UK, United Co-op, Vertbaudet, Waitrose,
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