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Capgemini IMRG e-Retail Sales Index: Discounting up by a third approaching Black Friday

21 Nov 2018

UK online retail sales growth hit the second lowest level (+8.5% YoY) ever recorded for October last month, as the subdued performance of online retail since the end of summer continues, according to the latest Capgemini IMRG e-Retail Sales Index.

Evidence for the tough period retail has been experiencing can be seen in the level of discounting on retail websites. In Q3 (Jul-Sep), 23% of overall sales revenue came from products that were in sale; this was up almost a third on the same period last year (17.8%) and was also a sharp increase on Q2 (Apr-Jun) when it was 15%. This is significant entering the Black Friday period, where retailers are reliant on discounting to capture shopper attention.

Online retail sales from a smartphone device was also down markedly in October, increasing by +17.2% YoY compared to +53% last year. Despite this, it was a positive month for the clothing sector on the back of its low performance in September (when growth was just +2.2%. The index increased +10.1% (YoY), with the strongest performance in Menswear at +49.6%.

Andy Mulcahy, strategy and insight director, IMRG: “The latest figures corroborate a trend that has become increasingly evident over the past few months – that, even months before Black Friday, a lot of retailers found themselves stuck in discounting cycles. In the third-quarter, the percentage of revenue from items sold at a discounted rate was up by almost a third compared to the same period in 2017.

“The ability to run a flash sale or discounting campaign can be an important tool for stimulating sales activity, if order volumes are running below forecast. Now, halfway through Black Friday week, this poses an interesting question: will the launch of Black Friday campaigns struggle to capture shopper attention, as they are used to seeing discount promotions from those retailers, or will shoppers still see this period as the key time to get most value for their under-pressure finances?”

Bhavesh Unadkat, principal consultant in retail customer engagement, Capgemini: “The October sales increase represented a modest start to the final quarter, and it is clear that consumer confidence is low at present. The GFK total consumer confidence dropped by one point and Major Purchase Index decreased by two points in October – we believe that the anticipation of Black Friday and the political and economic uncertainties around Brexit discussions are factors contributing to this.

“The confidence of online retailers is also challenged as they are caught up in cat and mouse play around discounting strategies. Do they protect margins by continuing to discount or do they pursue share of wallet as costs increase? Black Friday is now an established part of the cycle, meaning there are more data points for retailers to plan informed offers – it will be interesting to see whether they stick or twist on their strategies from last year.


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.

About IMRG

For over 20 years, IMRG (Interactive Media in Retail Group) has been the voice of e-retail in the UK. We are a membership community comprising businesses of all sizes – multichannel and pureplay, SME and multinational, and solution providers to industry. We support our members through a range of activities – including market tracking and insight, benchmarking and best practice sharing. Our indexes provide in-depth intelligence on online sales, mobile sales, delivery trends and over 40 additional KPIs. Our goal is to ensure our members have the information and resources they need to succeed in rapidly-evolving markets – both domestically and internationally.

About Capgemini

A global leader in consulting, technology services and digital transformation, Capgemini is at the forefront of innovation to address the entire breadth of clients’ opportunities in the evolving world of cloud, digital and platforms. Building on its strong 50-year heritage and deep industry-specific expertise, Capgemini enables organizations to realize their business ambitions through an array of services from strategy to operations. Capgemini is driven by the conviction that the business value of technology comes from and through people. It is a multicultural company of 200,000 team members in over 40 countries. The Group reported 2017 global revenues of EUR 12.8 billion.

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