Shoppers turning to web to beat recession – around two-thirds spent more online
this Christmas.

New figures from the IMRG Capgemini e-Retail Sales Index show that UK shoppers spent over £4.67 billion online in December – an equivalent
of £76.67p  for every person in the UK – 14.2% up on December 2007. 

Monthly growth fell for the first time since December 2002 with consumers spending
1.5% less online than in November. This is attributed to record high sales in
November, which saw higher than average yearly growth, and the timing of Christmas
2008 where the peak shopping weekend fell on 29th and 30th November.

Supporting research from Capgemini reveals that shoppers are turning to the web to beat the credit crunch, showing
how online spend can continue to grow despite static or falling growth on the
high street. Whilst traditional factors such as researching the best prices online
were reported by almost half (44.35%) of the 2,000 consumers surveyed, it is clear
online retail is now part of mainstream shopping behaviour. A third of shoppers
(37%) did more than half of their shopping online, with nearly two-thirds (59.9%)
spending more online this Christmas than last year. 

Sector splits

Consumers looking to stock up on alcohol for Christmas celebrations turned to
the internet for the best bargains spending 13% more in December compared to November.
Gifts and electricals also saw a marked increase in sales for December – where
shoppers spent 7% and 5% more respectively. Although clothing, footwear and accessories
saw flat growth compared to November, shoppers spent 32% more compared to December
2007. In contrast, the lingerie and health and beauty sectors saw a decline in
sales both month on month and year on year.

IMRG and Capgemini have also calculated the average online spend Average Basket Value
(ABV) to reveal consumer’s average spend per order online for each sector in December.

Sector

Monthly change in IMRG Capgemini Index

Annual change in IMRG Capgemini Index

Average online spend in December

Beers, Wines and Spirits

+13%

-16%

£67

Gifts

+7%

-1%

£44

Electrical Sector

+5%

+7%

£136

Clothing

0%

+32%

£57

Lingerie

-13%

-11%

£22

Health and Beauty

-13%

-4%

£38

 

Clothing, footwear and accessories is the fastest growing sector – it has consistently
outperformed the total market and other sectors throughout 2008. Although the
total market for online spending has experienced slowing growth, the clothing,
footwear and accessories sector has seen around 30% year on year increases every
month for 2008. Capgemini’s polling also debunks the myth that a significant proportion
of online garment sales can be attributed to shoppers ordering multiple sizes
to return those that do not fit. In fact only 21% of consumers often or always
do so. This may relate to the inconvenience of returning items with 20% of online
shoppers stating this discouraged them making more purchases online. More shoppers
(24%) were put off by the inability to handle items to check quality which trumped
worries over security (13%) and the unreliability of delivery services (13%).

Mike Petevinos, Head of Consulting for Retail for Capgemini UK, said: “This is the first recession we have seen where online will play a significant
role in mainstream spending. Our research provides further evidence that consumers
are turning to the internet as the most efficient way to save money in the downturn.
It is also clear that retailers are seizing the potential of the internet to reach
shoppers with targeted discounts and promotions. These factors have led to the
robust growth rates we are seeing for e-retailing as a whole.

James Roper, Chief Executive and Founder of IMRG, said:

It is becoming apparent that the recession is accelerating the rate at which
the internet is impacting the retail sector.  The traditional retail model in
which stock is held in an outlet for collection by the consumer is giving way
to a hybrid model that emphasises the store’s role as a display area and leisure
destination, and the value of both these aspects diminish in a recession.  Brands
that are nimble in a cross-channel environment give their customers a more efficient,
easy-to-use service and are rewarded with increased conversion rates and larger
average shopping baskets.  So it’s good to see more and more retailers participating
in the Index, as it gives us a clearer view of the market’s dynamics as well as
providing them with key intelligence with which to tune their performance.

For further information please contact Capgemini’s UK PR agency:

Luica Mak – 020 7025 6408 (Luica.mak@redconsultancy.com)

Ryan Larnach – 020 7025 6560 (Ryan.larnach@redconsultancy.com)

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

Notes to Editors

2008 overall review

The Index reveals that overall online spending in 2008 reached record levels
for each individual month with November seeing the highest sales. However, the
year on year in growth has fallen, showing that online is still experiencing growth
but at a slowing rate. The latest figures show that the first week of December
saw a slight decrease in online spending and this downturn sharpened week by week
in run up to Christmas as the credit crunch began to bite. The fall in monthly
growth is further accentuated as November saw particularly high online sales.

November 2008 the IMRG Capgemini e-Retail Sales Index was up 25.7% month on month,
this compared to an increase of 13% in the high street (according to the ONS Retail
Sales Index (RSI)). Year on Year growth of the ONS RSI has hovered around 0% in
the second half of 2008 compared to 16% in the IMRG Capgemini e-Retail Sales Index.

About IMRG

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 – the Collaborative
Business Experience – and through a global delivery model called Rightshore®,
which aims to offer the right resources in the right location at competitive cost.
Present in 36 countries, Capgemini reported 2007 global revenues of EUR 8.7 billion
and employs over 88,000 people worldwide.

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

About the ‘IMRG Capgemini e-Retail Sales Index’

The IMRG Capgemini Index 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 seventy e-retailers regularly contribute data to the IMRG Capgemini Index,
including: Airport Parking & Hotels Ltd, Adili.com, Arcadia Group, ASOS.com,
BeCheeky.com, Blacks, Boden.co.uk, Boots Direct, Brora, Buyagift.com, Carphone
Warehouse, Charles Tyrwhitt,  Cloggs, Comet, Co-operative Travel, Crocus.co.uk,
Dabs.com, Damart, Daxon, Debenhams, e-flowersUK.co.uk, EmpireDirect, Ethical Superstore,
Figleaves.com, Firebox, First Choice, Furniture123, Gadgets.co.uk, Game.net, Gameplay.com,
Getting Personal.co.uk, GreatValueJewellery.com, Greenfingers.com, Interflora,
I Want One of Those, JD Sports, J D Williams, Jason Shankey, John Lewis Partnership,
La Redoute, lastminute.com, Lighting-Direct, Lookfantastic.com, M and M Direct,
Made in Sheffield, Marks & Spencer, Millets, Naked Wines, New Look, Next,
Otto UK (Freemans, Grattan, Kaleidoscope), PetPlanet.co.uk, Pixmania, Prezzybox.com,
QED-UK, QVC, R C Roland, Redcats UK, Richer Sounds, Shoe-Shop.com, Shop Direct
Home Shopping, Schuh, Serenata Flowers, Tesco.com Wine, Tesco Electrical, The
Fragrance Shop, The Jewellery Channel, The Sunday Times Wine Club, TUI UK, Turton
Wines, Vertbaudet, Virgin Vie at Home, Waitrose, Wilkinson Hardware.

Quotes from retailers:

Robin Terrell, Managing Director of John Lewis online said:

Online sales in December grew stronger as the month progressed. Sales were strong
across the breadth of our product ranges with toys, gadgets and gifting all naturally
performing strongly. Best-sellers included Biscuit the animatronic puppy, iPod
docks and speakers, and fashions. This year we kicked off our Clearance sale online
on Christmas Eve for the first time ever and the results were very strong. We
saw good sales through Christmas Eve, with a record peak in visitors to the site,
and then through Christmas Day with the busiest hour being 9-10pm. Lots of customers
were browsing, we believe to help them plan their shopping trips into our stores.

Andrew Ellison at Schuh said: “Online sales were well beyond our (cautious) expectations during the festive
period, with an increase over the same period last year of over 30%. Our busiest
day online in terms of visits to our web site was on Boxing Day and we also saw
a substantial increase in visitors on 22nd December when we launched our online
sale.

Sarah Blair Gould, eCommerce Manager at Boden, said: “Trade in the run up to Christmas was in line with our expectations, which was
good considering the tough trading conditions. Web traffic was up 37% year-on-year
for December and our busiest day was December 12th which was our Sale launch day.

Christian Robinson, Managing Director of Firebox.com said: “December 2008 was an exciting month for Firebox. Monday the 8th December saw
a record number of orders (in terms of volume and value) in the ten years since
we began trading. Our peak day for traffic during 2008 was in December and in
addition, sales were up on 2007 and were higher than expected over the Christmas
period.

Rowan Gormley, Founder of Naked Wines said: “Despite the credit crunch, people are buying wine, but they are buying more intelligently.
Over 50% of our new customers in our first month of trading agreed to sponsor
a winemaker, in return for a third discount on their wines.

Steve Robinson, Chief Executive of M and M Direct, commenting on Christmas trading, said: “The business did extremely well over the Christmas period against a strong comparative.
Customers in these difficult times are embracing the internet and wanting great
value products. Looking forward to 2009 we believe we are well positioned in a
challenging market to offer our customers a continuing great range of products
at great prices and it will be those retailers that manage to deliver value for
money that will continue to grow.

Shop Direct Group Chief Executive Mark Newton-Jones said: “We are pleased with our trading performance during the Christmas period and particularly
with the continued growth of our online business as this becomes the shopping
channel of choice for many of our new and existing customers. We believe the retail
outlook in 2009 will be difficult. However, we will continue to invest in and
improve our broad range of products, our online platform and our customer service,
whilst continuing to offer our customers flexible payment terms.

Gary Berg, Managing Director at Lighting Direct, said: “Sales for December were lower than the previous year by approximately 10%. However
the number of orders received was almost identical to last year which shows that
in our market sector customers are still buying but spending less.  The traffic
and sales figures for Christmas Day and Boxing Day year on year were similar.