• Lowest ever annual growth of 5%
  • Consumers spent £4.3 billion online in January
  • Sales fell by 22% compared to December 2009
  • Sales from multichannel retailers fell faster than from online only

The IMRG Capgemini e-Retail Sales Index has recorded the lowest annual growth
rates in the history of the Index. Like-for-like growth rose by only 5% from January
2009 to January 2010, with UK shoppers spending £4.3 billion online in the month.
Retailers enjoyed strong sales in December 2009, managing to hold off on heavy
discounting, but the result was weaker annual growth for January.

Monthly growth fell by 22% from December 2009 to January 2010. This is in line
with the usual seasonal trend of sales falling after the Christmas surge, but
the decline is greater than in recent years.

Chris Webster, Vice President, Retail Consulting and Technology, Capgemini, said: “While annual growth for e-retail was slow in January, we should factor in the
fact that December was a very strong month for the industry. Last January, e-retailers’
sales were buoyed up by heavy discounting and promotions that were necessary to
sell stock left over from poor Christmas trading resulting from the impact of
the recent move into recession”.

Tina Spooner, Director of Information, IMRG, said: “The weaker yearly growth in the UK e-retail market during January follows a
strong December when online retailers were clearly well prepared for the festive
season, indeed December 26th and 27th saw the highest sales for all of 2009. Less
retailer discounting due to well planned stock levels and the increase in VAT
equally appear to have had an impact on the online retail sector during January.”

Sector splits

Most sectors broken out in the Index showed strong like-for-like annual growth,
with the only exception being the electricals sector.

After a strong performance over Christmas, the monthly decline was strongest
in the beers, wines and spirits sector, where consumers spent 58% less than in
December, as Christmas excesses were replaced by a January detox.

The clothing, footwear and accessories sector, which consistently drove the total
market throughout 2009, also saw strong yearly growth of 10% in January 2010.

 

Like-For-Like Growth

Sector

% Change Dec09-Jan10

% Change Jan09 – Jan10

Total E-Retail Market

-22%

5%

–  Multichannel

-27%

10%

– Online

-14%

-2%

Beers, Wines and Spirits

-58%

34%

Clothing, Footwear and Accessories

-30%

10%

 – Accessories

-28%

127%

 – Footwear

-24%

51%

 – Lingerie

-25%

20%

Electricals

-49%

-1%

Gifts

-76%

10%

Health and Beauty

-41%

35%

Other (*includes travel & Home and Garden)

25%

0%

 

Multichannel vs. online only

Both the e-retail Index for multichannel and online only retailers fell compared
to the previous month, however multichannel retailers’ online sales fell at twice
the rate (27%) of pureplay retailers’ sales (14%). This reflects the fact that
multichannel retailers have an advantage in the run up to Christmas by having
a physical high street presence, but that this falls away post-Christmas, when
consumers are not so concerned by last-minute deliveries.

Quotes from retailers:

Talin Vartevanian, Head of Ecommerce at Faith Shoes comments: “Faith.co.uk saw really strong growth in January against last year. We were expecting
an increase especially due to the launch of our new web site in August 2009 and
a stronger product offering. Gross sales were up 128%, visits up 35% and orders
up 117%. The adverse weather had a positive impact on online sales and apart from
a natural downturn in revenue after the Christmas peak, Faith.co.uk continues
to maintain its momentum with positive growth against last year”.

Cameron McLean, PayPal’s General Manager for UK merchant services says: “With many still feeling the pinch from Christmas it’s not surprising that the
index was down in January. However, the like for like monthly index shows that
sales of clothing, footwear and accessories and health and beauty products are
up compared to January 2009. This mirrors the trend we’ve seen at PayPal Offers,
the online discount shopping portal, where Ugg boots and perfume were amongst
the most frequently searched for items in January. We believe this month for month
increase in sales of these ‘pick me up’ products is a sign that shoppers still
want to treat themselves and are increasingly looking to discount and voucher
sites to do so”.

Jonathon Brown, Head of Online Selling at John Lewis, comments: “It was another strong month for johnlewis.com as the site closed out the year
on another high. Overall sales for the month of January were 46% up on last year
with all directorates delivering a strong performance; most notable was fashion,
which was over 100% up year on year. In addition the site received continued high
levels of traffic and with AOV and order numbers staying high it was a good way
to finish the reporting year. It is also worth noting that the site also received
its 100 millionth visitor for the year, highlighting the demand for online services
from John Lewis and how the retailer is successfully driving its multi-channel
strategy forward, in a way that our customers appreciate”.

 “Due to ensuring that we have the best pricing on the internet for our sector,
and by putting customer service at the forefront of the business, we have been
thrilled at what we’ve achieved during January”
says Alison Wade, Head of Marketing at Buyagift.com. “There is a real can do attitude within the company and we are always striving
for excellence in every area of the business. This enthusiasm for the products
we sell, coupled with a fantastic offering, has really paid off”.

Bruce Fair, MD of Kelkoo UK says: “The online January sales started earlier than in previous years. Additionally,
VAT increased back to 17.5% in January, both of which go some way in explaining
the drop in sales. Worries over rising prices and an uncertain economic climate
is making shoppers less impulsive – driving them to spend more time comparing
prices, products and retailers, so they can have complete confidence in their
decisions when shopping online.

“Despite a significant slowdown in January, we are still predicting solid growth
in the e-retail sector this year, with the market expected to grow by 12% by the
end of 2010. Consumers know they can get better value, more choice and a more
convenient shopping experience online. By the end of the year, online shopping
will account for £1 in every £10 spent in the retail sector and the average online
shopper will spend upwards of £1,100 online”.

For further information please contact:

Flora Hancox – 020 7025 6576 (flora.hancox@redconsultancy.com)

Notes to Editors

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. The Group relies on its global delivery model called Rightshore®,
which aims to get the right balance of the best talent from multiple locations,
working as one team to create and deliver the optimum solution for clients. Present
in more than 30 countries, Capgemini reported 2008 global revenues of EUR 8.7
billion and employs over 92,000 people worldwide.

More information is available at www.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.

Over one hundred e-retailers regularly contribute to the IMRG Capgemini Index,
including Airport Parking & Hotels Ltd, Amara, Arcadia Group (Burton, Top
Man, Top Shop, Dorothy Perkins, Evans, Wallis, Miss Selfridge), Ascension (formerly
Adili.com), ASOS.com, Beautique.com, BeCheeky.com, Binends.com, Black Essentials,
Blacks, Boden.co.uk, Boohoo.com, Boots Direct, Brora, Buyagift.com, BuyItDirect.co.uk,
Carphone Warehouse, Charles Tyrwhitt,  Clarks, Cloggs, Comet, Co-operative Travel,
Crocus.co.uk, Dabs.com, Damart, Daxon, Debenhams, Dobbies, e-flowersUK.co.uk,
Ethical Superstore, Faith Shoes, Figleaves.com, Firebox, First Choice, Freemans
Grattan Holdings, Furniture123, Game, Gameplay, Gamestation, Getting Personal.co.uk,
GreatValueJewellery.com, Greenfingers.com, Holiday Extras, Home & Cook, House
of Fraser, Interflora, JD Sports, J D Williams, Jack Wills, Jason Shankey, John
Lewis Partnership, Ladderstore.com, La Magia, La Redoute, Lastminute.com, Lighting-Direct,
LK Bennett, Lookfantastic.com, M and M Direct, Made in Sheffield, Marks &
Spencer, Millets, Monster Travel, Musto, Naked Wines, NaturalCollection.com, New
Look, Next, Peacocks, Perfect Handbags, PetPlanet.co.uk, PIXmania, Prezzybox.com,
QED-UK, QVC, R C Roland, Redcats UK, Redfoot Revolution, Richer Sounds, Rubber
Sole, Sainsbury’s, Scales Express, Shoe-Shop.com, Shop Direct Home Shopping, Schuh,
Serenata Flowers, Shudoo, Slurp.co.uk, SockShop, Sofa and Home, Sunshine.co.uk,
Tesco.com, Tesco Electrical, The Fragrance Shop, The Health Supermarket, The Natural
Store, TUI UK, Turton Wines, Vertbaudet, Vie at Home, Waitrose, Wallace Sacks
& Wilkinson Hardware.