UK online retail sales grew by 20% in June – the highest level in two years – according tofigures from the IMRG Capgemini e-Retail Sales Index, adding to other recent evidence of economic
recovery in the UK.The strong improvement recorded in June helped push up first-half UK online retail sales growthto 16%, well ahead of the 12% growth originally forecast for 2013 and the 14% full-year growthrecorded in 2012. Alongside the 20% year-on-year increase in June, sales were up 2.4% compared withthe previous month, the first time the Index has recorded a rise between May and June in fiveyears.
Online retail association IMRG described the second quarter of the year as “solid”, with onlinesales up 17% on average on the same period in 2012. However, it said consumers remained “underpressure, as inflation outstrips wage growth”. The average basket value (excluding travel) in Junestood at £79, down 9% compared to £87 in June 2012, as shoppers took advantage of seasonalpromotions online – boosting online sales while reducing average basket value.
In terms of sectors performing well, Clothing saw 29% year-on-year growth in June, “as the warmweather encouraged shoppers to update their summer wardrobes”, IMRG said. Sales for Home and Gardenproducts were also up 35% year-on-year on a like-for-like basis in June.
IMRG and parcel operators report that cross-border e-commerce transactions are forming anincreasing proportion of sales as online retailers and parcel delivery providers and intermediariesrespond to growing demand from customers. For some UK online clothing retailers such as ASOS,cross-border is estimated to make up 50%-60% of sales.
IMRG estimates that cross-border accounted for around 14% of UK online sales in 2012, a figureit expects to rise to 17% in 2013, 21% in 2014, 24% in 2015, rising to around 28% in 2016 and 32%by 2017. Andrew Starkey, IMRG’s director of e-logistics, puts UK cross-border online retail growthat around 20-25% currently, while MetaPack estimates that it could be as high as 50% a year.
Cross-border online retail in Europe as a whole is set to grow by more than 38% this year toreach €36bn in 2013, an estimated 10.6% of total online sales in the region, according to IMRG.
Meanwhile, ‘M-Commerce’ sales via smartphones and tablets continues to grow rapidly, with theIMRG Capgemini M-Commerce Index up 136% year-on-year in June, year on year, and up 8% compared withMay 2013. Conversion rates via mobile devices increased from 1.27% in June 2012 to 2.03% in June2013, as spending via tablets increases, “driving conversation rates closer to that of desktops”,said IMRG.
Tina Spooner, chief information officer at IMRG, commented: “The online retail market hasperformed above expectation so far this year, with H1 coming in at 16% average growth against ourearlier forecast of 12%. We haven’t seen the rate of year-on-year growth recorded in June for twoyears, which is around the time confidence in an economic recovery seemed to be heading toward itslowest ebb.”
She said the solid growth last month was driven by a strong performance in clothing, “perhaps asa result of heavy discounting. However the UK online retail market has performed remarkablyconsistently throughout 2013 so far, which may signify an overall improvement in consumerconfidence that will be welcome news for many.”
Chris Webster, head of retail consulting and technology at Capgemini, commented: “This is instark contrast to the continued decline in store footfall reported by the British Retail Consortium(BRC) over the first half of the year and amplifies the increase of online at the expense of storesales. In addition, Britons remain price-conscious, but have responded well to good deals foundonline and it’s good to see consumer confidence returning.”
For UK 2C parcel operators, the rapid growth in home deliveries represents a considerablechallenge as well as an opportunity. Hermes UK recently told CEP-Research that it was set to morethan double its peak-season delivery capacity by winter 2014 compared with peak season 2012 as theparcel network continues to invest in hub and delivery infrastructure to support strong growth indemand for home deliveries.
The IMRG Capgemini Index, which was started in April 2000, tracks ‘online sales’ of more than100 UK-based e-retailers.
