UK online retail sales recorded double-digit growth for the second month in a row in May but e-retail delivery volumes experienced an unexpected slowdown as “unsettled” weather and the general election in the country may have impacted on the shoppers’ behaviour, according to the British e-commerce association IMRG.
Last month, British e-retail sales grew by 10% year-on-year, the second highest growth rate in 2015 so far after the 13% growth in April, with a 2% monthly increase compared to April, the IMRG Capgemini e-Retail Sales Index revealed. This follows an unprecedented four months of single-digit growth and first-ever quarterly single-digit growth of 7% in Q1 2015.
The potential growth of the Index is likely to have been impacted by the weather conditions in May, which in turn impacted on the clothing sector showing fairly low year-on-year growth of just 9% last month and a 1% increase on April. This stands in contrast to the 20% year-on-year growth recorded in May 2014 when the UK experienced a warmer than average month.
The home and garden sectors also reflected the impact of the disappointing weather in May in different ways. While online shoppers were forced by the unsteady weather to put off the spending on their gardens, they were instead spending the money on purchases for the home. This resulted in the 27% year-on-year decrease in the garden sector and made the sales in the home sector go up by 29%.
The Index also revealed that the electrical goods sector continued its disappointing performance in May with only 3% growth year-on-year. It has been the weakest performing sector this year so far. However, sales of accessories performed well in May with spectacular annual growth of 66%, up 19% on April.
The m-commerce sector, which comprises sales via a smartphone or tablet device, recorded a 48% increase on May 2014, continuing to drive the overall online sales growth of the month. Revealingly, sales made on a smartphone significantly outweighed tablets, reporting a 107% annual growth compared to 32% for tablets. However, there is a disparity between the amounts spent online via the respective devices. While the average basket value of a smartphone transaction was £73, a purchase on a tablet was higher with £83.
Tina Spooner, chief information officer, IMRG, said: “After the below-expectation performance in Q1 – when sales growth for the quarter was up just 7% – it’s encouraging to see online sales growth holding up during a fairly unpredictable month that featured the general election and unsettled weather patterns. It was a really mixed bag for the sectors in May – it may be that electricals are struggling due to the lack of any new must-have technology and garden was clearly impacted by the weather – but as we saw in home and travel there are still some strong areas of growth driving the Index.”
Alex Smith-Bingham, head of digital, consumer products and retail, Capgemini, added: “Despite the generally solid level of consumer confidence, the online retail sector has seen quite a turbulent few months this year. However, this month’s Index result on the back of a strong performance in April indicates that we’re on the right track. The weather is improving which invariably has a positive impact on shopper’s spending and of course we’re heading into the holiday season which will encourage consumers to update their summer wardrobes.”
Unexpectedly, the separate IMRG MetaPack UK Delivery Index revealed a sales decline of 2.9% in a monthly comparison which is the first drop between April and May the index recorded so far, with the unsteady weather and the general election likely to have caused the fall. This has also reduced the cumulative year-on-year growth to only 9% in May, down from the 10.9% reported last month and significantly behind the start-of-year forecast of 13%.
However, there was also a positive development in terms of delivery service quality, with the on-time or attempted delivery rate remaining high over 94% and with failed delivery attempts staying low. UK shoppers can now expect nearly 89% of their orders to arrive on time and to their expectation at the first attempt, IMRG stressed.
Andrew Starkey, head of e-logistics at IMRG, said: “Previous experience shows that in the months and weeks preceding an election retail performance slows, then bounces back as consumer confidence returns. But the concern is that this might have longer term implications because in online retail the month of June is traditionally lower than May. But this year we must hope that, with the election period now out of the way, the market recovers sufficiently to put us back on track for the rest of the year.”
Kees de Vos, chief commercial officer at MetaPack, added: “While the growth in online delivery volumes has generally performed below expectation so far this year, May was a bit of an unpredictable month with the uncertainty around the general election outcome and unseasonal weather likely impacting on sales for some retail categories, so macro factors could have played a part in these figures. The weather so far in June has been far more seasonal, so it will be interesting to see if we record a pick-up moving into June.”
