Online sales grew by 14% to £104bn in 2014, according to etail trade association the IMRG.
According IMRG and Capgemini say e-retail now accounts for an estimated 24% of the total retail market and predicts that in 2015 the market will grow by 12% as shoppers spend £116bn online.
Adgild Hop, principal, head of retail consulting, Capgemini [IRDX VCPG] said 2014 had been a milestone year for online retail, with the £100bn milestone passed for the first time. “When we consider that almost £1 in every £4 is now spent online, and that a large proportion of the other £3 is influenced by some form of digital interaction, it becomes very clear that retailers need to continue to embrace the opportunity that e-retail poses,” he said.
Over the Christmas period, the eight weeks from November 2 to December 27, UK shoppers spent £21.6bn, some 13% more than at the same time last year.
But in December, ecommerce grew by just 5% on last year as Black Friday brought spending forward to the week of November 23. In total shoppers spent an estimated £810m online on Black Friday (November 28), making it the biggest-ever day for UK online sales.
“Black Friday was unquestionably a success for the value-seeking consumer,” said Hop, “but for retailers themselves its success is not quite as clear. As the index reveals, spending was brought forward a month earlier, at much lower margins for retailers, as a result of the discounts available to customers in November.”
Jonathon Brown, chief executive of MandM Direct [IRDX RMMD], said Christmas 2014 had been a good one for it, with sales 15% up in December and 25% up on Christmas Eve. “The consumer is still there with money in their pockets,” he said. He said Black Friday had worked for the company, which ran promotions throughout the week. “It was about showcasing the deals that we have,” he said. He said the company’s logistics held up throughout the period.
But Black Friday proved a testing time, especially in terms of delivery. Andrew Starkey, head of elogistics at IMRG, said demand on Black Friday was 30% ahead of expectations, swamping retailers in a ‘tsunami’. He said that retailers would already be planning for next year – but that it was unrealistic that they and logistics companies would establish capacity that would only be used for one or two days a year. “If we can manage expectations so that shoppers know they will get their parcel in five days, then it will be OK,” he said. He also suggested that click and collect would play a greater role at Christmas 2015.
Jon Lawton, European ecommerce manager at Rocket Dog, said spreading marketing offers over a wider period would also serve to lighten the load.
Tina Spooner, chief information officer at IMRG [IRDX VIMR], said the story of Christmas trading had been one of compression. “The anticipated heavy discounting that was very widely communicated in advance of Black Friday served to concentrate the peak around that day in November.
“Looking at Christmas trading as a whole, the 13% growth for November and December combined was actually around where we would have expected. The challenge going forward is that Black Friday has been cemented into shoppers’ consciousness and they will expect the same kind of focused discounting next year. As an industry, we will need to work together to understand how this extreme activity spike can best be managed in the interests of both shoppers and retailers.”
Mentioned in this piece…
MandM Direct is a UK-based online discount fashion retailer in the United Kingdom. It sells its products over the internet and by mail order. Its catalogue is distributed quarterly. It specialises in buying clearance stock from manufacturers and selling at discounted prices.
MandM Direct stocks nearly 200 brands including, adidas, Bench, Henleys, Timberland, Diesel and Puma.
The company was started as M and M Sports in 1987 by Mark Ellis and Martin Churchward. (more…)