UK online retail grew by 11% in 2015 to £114 billion and is expected to grow by 11% again in 2016, with total e-retail sales estimated to reach £126 billion by the end of this year, according to British e-commerce association IMRG and the IMRG Capgemini e-Retail Sales Index.
E-retail accounts for an estimated 27% of total retail market in the UK, by far the highest percentage in any major European market.
Despite the double-digit growth, last year’s annual performance in British e-retail sales is slightly below Capgemini’s 2015 forecast of 12% growth.
On the other hand, the Christmas shopping period as a whole, defined as the eight weeks between 1 November and 26 December, saw UK shoppers spend £24.4 billion on gifts and bargains. This corresponds to a new Christmas record for the Index with 12% growth compared to Christmas 2014.
The Index figures showed that the greatest concentration of sales during the Christmas period (17%) took place during the week of Black Friday, starting on 22 November. During what has become the biggest event in the retail calendar, online sales increased 62% on the previous week, with shoppers spending an estimated £4.3 billion on discounted goods. This represents a significant increase on the 44% growth recorded during the same period in 2014, and 20% in 2013, before Black Friday existed in the UK, IMRG explained.
In terms of product categories, the shopping preferences of consumers have shifted during 2015, the Index further revealed. “The more discretionary items – those sectors traditionally associated as treats – have grown, whilst those that have historically driven the Index have fluctuated throughout the year,” IMRG said. In 2015, the sales of gifts, health & beauty, and travel sectors increased by 18%, 22% and 16% respectively, in a year-on-year comparison. In contrast, electricals and clothing sectors which have previously generated strong double-digit growth in online sales recorded a comparatively low 3% and 11% growth respectively while home & garden sales were down 2% year-on-year.
M-retail, which comprises online purchases made via mobile devices (smartphones and tablets), generated spectacular 42% growth in 2015. During the third quarter (August to October) of 2015, 45% of all online sales were made via a mobile device.
Tina Spooner, Chief Information Officer at IMRG said: “Rounding off a mixed year for e-retail, where we saw single-digit growth in several months, the UK online retail industry recorded a solid performance in December, with sales growth significantly higher than the same month in 2014. With December being the wettest since records began, it appears the unseasonal weather, together with growth in mobile commerce helped to boost online sales over the festive period. As we observed in 2014, the effect of Black Friday resulted in November being the peak month for the online retail industry as consumers brought forward much of their Christmas spending, no doubt boosted by promotional activity around Black Friday.”
“Sales via smartphones continue to grow at a significantly higher rate than those via tablets, with sales growth during December reaching the highest recorded during 2015 at 117.5% year-on-year. While tablets continue to account for the largest share of mobile commerce, significantly, during December four in 10 m-retail sales were completed on a smartphone, compared with 28% penetration in December 2014,” she added.
Alex Smith-Bingham, Head of Digital, Capgemini, highlighted the increasing dominance of online channels in consumer spending, with Black Friday shifting from a high-street event to an online shopping event in just two years and retailers extending their discounting over a week, rather than a single day. “We also saw mobile confirm its role as a primary shopping channel, providing consumers with an unprecedented level of convenience. In 2016 I’m confident we’ll see this influence increase even further with mobile representing over half of all sales made online.”
