Analysis

Ecommerce gets off to a steady start but set to face challenges in 2017: IMRG

UK retailers saw their online sales grow by a collective 12% in January, the IMRG said today. This, said the ecommerce trade association, was a steady start to a year that could be challenging, given the weaker value of the pound.

The latest IMRG Capgemini e-Retail Sales Index suggests that shoppers each spent more online in January than they did the year before, with average basket values of £85 up from £79 a year earlier. IMRG says this is the highest amount spent in the month of January since January 2010, when shoppers spent an average of £81. But while average basket values rose for sectors including clothing, gifts and accessories, the electricals sector dropped by 12% on last January to £129. Sales growth in the sector fell for the second month in a row, this time by 9% compared to last year.

Justin Opie, managing director, IMRG [IRDX VIMR], said: “January’s figures reveal a steady start to the year, but 2017 is not without its challenges for online retailers. The most pressing one relates to the devaluation of the pound following Brexit, as it means price rises are looming for an industry where retailers often get pressured into a cycle of discounting to stimulate sales activity among customers. One area where we may see a big impact is electricals – already having a tough time online with sales growth down -8.5% in January and the average basket tumbling. Sonos, Microsoft and Apple among others have recently announced big price hikes of 20% and over to come, so retailers in this sector may continue to have a difficult period to navigate going forward.”

Sales growth for clothing retailers grew by 11% year on year, the lowest rise enjoyed by this sector since March 2016. Gift sales were 62% up on last year, the highest growth for eight years.

Bhavesh Unadkat, principal consultant in retail customer engagement design at Capgemini [IRDX VCPG], said: “A growth rate of +12% for online retail is pretty strong. However, when compared with the growth rate for the last quarter, it has certainly steadied. The rise in inflation will raise caution among shoppers and with price hikes expected across petrol, electricals and food, this caution will remain for some time to come. The focus for retailers in 2017 should be on ensuring they can capture as much of the UK market share as they can, as well as exploiting international sales, should the pound weaken.”

Mentioned in this piece…

IMRG

IMRG

IRDX: VIMR

Their membership community comprises businesses of all sizes – multichannel and pureplay, SME and multinational, as well as suppliers to the industry. (more…)

Capgemini

Capgemini

IRDX: VCPG

CapGemini S.A. is a French multinational corporation headquartered in Paris, France. It provides IT services and is one of the world’s largest consulting, outsourcing and professional services companies with more than 130,000 employees in 44 countries. (more…)

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