• £7.9 billion spent online during December: a record index score with 16.5% year-on-year growth
  • £68 billion spent online in 2011; 16% increase on previous year
  • Growth despite a year-on-year slowdown in clothing sector – sales up 12% compared with 40.5% in December 2010
  • Forecast for 2012: 13% growth and approximately £77 billion in total e-retail sales

A total of £68 billion was spent online in 2011, which resulted in the Index increasing by 16%. For 2012, IMRG and Capgemini predict the Index will record a further 13% growth, with total e-retail sales estimated to be worth £77 billion by year end. The December figures show that online retailers had a successful Christmas, mirroring the high street success reported by the British Retail Consortium of 2.2% growth. e-retail now accounts for 17% of the total UK retail market and is likely to increase with the rise of mobile commerce and the huge numbers of tablet computers sold last year.

Chris Webster, head of retail consulting and technology at Capgemini says: “Strong online sales over Christmas were even more impressive since they built on a 25% year on year growth from 2009 to 2010.. During 2011 we saw continued pressure on sales as shoppers became savvier in looking for bargains and this continued in the run up to Christmas. The rapid rise of mobile in 2011 will continue into 2012 as consumers became familiar with shopping via tablet devices and smartphonest, some taking advantage of their recent Christmas presents. This changing landscape will open up a myriad of opportunity for retailers including the integration of stores into the multi-channel world and the potential of new capabilities like location based markerting services.”

The Christmas sales and 16.5% year-on-year growth on December 2010 represents a strong recovery on the 11.2% year-on-year growth reported in November. It is still below the growth levels seen 12 months ago (25% year-on-year growth December 2009 – December 2010), but demonstrates that the online market still offers a very positive growth opportunity. That said, the average growth rate throughout the first half of 2011 was in the high teens, but dropped to the low teens in during the second half. This slowdown is due to sales in the travel sector slipping as well as a disappointing second half for the clothing sector which saw a decline in year-on-year growth from 40% in December 2010 to just 12% in December 2011.

Furthermore, a number of well-known fashion brands at the mid- to low-end of the market reported poor sales in their recent trading statements while luxury brands are turning huge profits. This is partly due to the spending power of middle-income Britons being squeezed by rising inflation and low wage increases while high net worth individuals continue to earn and spend.

This is also apparent in the travel sector as, while growth has declined, the average purchase has increased from £731 in 2010 to £850 in 2011 reflecting higher costs for flights and resilience in luxury holidays for high earners.

Online-only versus multichannel

Online-only/ catalogue retailers are gaining ground in year-on-year growth as high street / multichannel experienced a decline in the second half of 2011, dropping from 25% to 14% growth. In comparison, online-only retailers’ sales rose from 11% in the first half of 2011 to 13% in the second half, reflecting a flight toward lowest cost options in contrast to previous preferences for the ease and familiarity of a high street brand.

James Roper, CEO of IMRG, said: “The December results are incredibly impressive as the growth for the same period in 2010 was 25%, meaning it had to climb from a very high base. Despite the fact that consumers are finding themselves with less and less disposable income, the e-retail market keeps defying the general retail trend to record double-digit growth. Online is such an integral part of the shopping experience now that it generally plays at least some part in most purchases, whether through research and comparison or social media and product reviews. We are forecasting growth of 13% moving into 2012, lower than our estimate for 2011 but it would still be an extremely positive performance given the economic climate and the fact that the online market has reached a degree of maturity now, meaning it can offer a really key contribution to help drive the economic recovery.”

December 2011 eRetail Sales Index figures

Industry quotes
Jonathon Brown, Head of Online at John Lewis comments: “December was a great month for johnlewis.com and online sales for the five weeks to 31 December 2011 were +29.7% across the site. This was boosted by more favourable weather (compared to last year), and we capitalised on this by having a fantastic offer for our customers in the run up to Christmas and also in our Clearance that went live on Christmas Eve at 5pm.  We saw record breaking sales across all of our directorates and more customers than ever coming to johnlewis.com to plan, choose and buy their perfect gifts for Christmas.

“Fashion had an outstanding month with sales +40% on last year with womenswear boosted by a strong Clearance offer and record sales from a number of our brands. Home was incredibly strong throughout the month delivering sales increases +50% on 2010. Within Home our seasonal offer proved to be a real hit with customers as Christmas trees, decorations and hampers were top choices as well as all the products you need to make the perfect Christmas – from tableware to cutlery and food preparation all showing strong sales.

“Finally, our Electrical and Home Technology department had a strong month delivering sales +25% on last year. IT especially, and even more so iPads, proved to be top of customers Christmas lists. So, a tremendous Christmas and a great start to Clearance saw the best December we (johnlewis.com) have ever had and set us up well for a tough market in 2012.”

Dan Mountain, CEO at Buyagift comments: “Buyagift.com achieved online business to consumer sales growth of 10.2% in December 2011. Given the tough market conditions we were delighted with these results.  The new Buyagift.com web site (launched in October 2011) achieved a conversion rate of 10.92% in December 2011 (up from 8.54% in Dec 2010).

“We are very fortunate that our business is continuing to thrive in these tough times.  Our view is that this growth is driven by a combination of our strong on-line reputation, “Best Price Guarantee”, industry leading special offers and the continued change in consumer purchasing habits (from high street to on-line).  Our new mobile trading platform (m.buyagift.co.uk) is also performing well and accounted for 21.4% of our overall traffic in the month.”

Gwynn Milligan, MD of Cocosa comments: “Cocosa has had a record breaking Christmas, with our online sales up 125% year, we broke daily and weekly sales records. We have cleared all of our stock that went into sale, so that with investment in our people and the business, and the unwavering support we have from our chairman, this ensures that we are best placed for this growth to continue.

“Our targets are both ambitious and achievable, and as we continue to gain momentum, our customers, our branded partners and our people, sit at the heart of our success.”

Andrew Tse, MD at Purely Gadgets said: “Sales for December have grown year-on-year, only single digits of 4% but it was a strong December in 2010, despite the snow and shortened month. This year supply problems have hit what would have been a stronger December and Q4 if not for supply interruptions in Thailand affecting hard disk drives and popular DSLR cameras.

“The areas of note for us have been an exceptionally good September, where we hit the right audiences with back to school, back to university and technology for the student campaigns. Our continued focus on website content including videos and hot exciting products has driven a £ spend per visitor double the industry average and a basket value that is consistently higher than the industry.”

Russ Carroll, UK MD of Shopping.com, comments, “The Christmas rush came later this year, partly due to the fact that retailers offered delivery as late as two days before Christmas Day. It’s likely the recession also played a part as consumers held out for the sales in a bid to find the best bargains. Clothing experienced consistent e-retail growth in 2011 and this is something we expect to see continue well into 2012.”

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
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 organisation, 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, Boutique to You, Brandosa.co.uk, Brora, Buyagift.com, BuyItDirect.co.uk, Carphone Warehouse, Charles Clinkard, Charles Tyrwhitt,  Clarks, Cloggs, Cocosa, 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, Naked Wines, NaturalCollection.com, New Look, Next, Peacocks, Perfect Handbags, PetPlanet.co.uk, Philip Kingsley, PIXmania, Prezzybox.com, Purely Gadgets, 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] Calculation by 7.9 billion, divided by adult population of UK (50,893,318)

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