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December online sales were lower than November, says IMRG

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The latest figures from the IMRG Capgemini e-Retail Sales Index show that UK shoppers spent over £4.67 billion online in December, equivalent to £76.67 for every person in the UK and an increase of 14.2% on December 2007.

However, “monthly growth fell for the first time since December 2002 with consumers spending 1.5% less online than in November,” says IMRG. “This is attributed to record high sales in November, which saw higher than average yearly growth, and the timing of Christmas 2008 where the peak shopping weekend fell on 29th and 30th November.”

Capgemini, however, says its consumer research confirms shoppers are turning to the web to beat the credit crunch. “Whilst traditional factors such as researching the best prices online were reported by almost half (44.35%) of the 2,000 consumers surveyed, it is clear online retail is now part of mainstream shopping behaviour. A third of shoppers (37%) did more than half of their shopping online, with nearly two-thirds (59.9%) spending more online this Christmas than last year.”

Whilst some sectors saw substantial falls, there was good news for others. “Consumers looking to stock up on alcohol for Christmas celebrations turned to the internet for the best bargains, spending 13% more in December compared to November,” the researchers report.

“Gifts and electricals also saw a marked increase in sales for December — where shoppers spent 7% and 5% more respectively. Although clothing, footwear and accessories saw flat growth compared to November, shoppers spent 32% more compared to December 2007. In contrast, the lingerie and health and beauty sectors saw a decline in sales both month on month and year on year.”

Sector Monthly change in IMRG Capgemini Index Annual change in IMRG Capgemini Index Average online spend in December
Beers, wines and spirits +13% -16% £67
Gifts +7% -1% £44
Electrical +5% +7% £136
Clothing 0% +32% £57
Lingerie -13% -11% £22
Health and beauty -13% -4% £38

“Clothing, footwear and accessories is the fastest growing sector,” the researchers confirm. “It has consistently outperformed the total market and other sectors throughout 2008. Although the total market for online spending has experienced slowing growth, the clothing, footwear and accessories sector has seen around 30% year on year increases every month for 2008.”

Capgemini’s polling also debunked the myth that a significant proportion of online garment sales can be attributed to shoppers ordering multiple sizes to return those that do not fit, the researchers say. “In fact only 21% of consumers often or always do so. This may relate to the inconvenience of returning items with 20% of online shoppers stating this discouraged them making more purchases online. More shoppers (24%) were put off by the inability to handle items to check quality which trumped worries over security (13%) and the unreliability of delivery services (13%).”

Overall for the year, “the Index reveals that overall online spending in 2008 reached record levels for each individual month with November seeing the highest sales. However, the year on year in growth has fallen, showing that online is still experiencing growth but at a slowing rate. The latest figures show that the first week of December saw a slight decrease in online spending and this downturn sharpened week by week in run up to Christmas as the credit crunch began to bite. The fall in monthly growth is further accentuated as November saw particularly high online sales.”

James Roper, chief executive and founder of IMRG, says that “it is becoming apparent that the recession is accelerating the rate at which the internet is impacting the retail sector. The traditional retail model in which stock is held in an outlet for collection by the consumer is giving way to a hybrid model that emphasises the store’s role as a display area and leisure destination, and the value of both these aspects diminish in a recession.”

“Brands that are nimble in a cross-channel environment give their customers a more efficient, easy-to-use service and are rewarded with increased conversion rates and larger average shopping baskets,” he continued. “So it’s good to see more and more retailers participating in the Index, as it gives us a clearer view of the market’s dynamics as well as providing them with key intelligence with which to tune their performance.”

Retailers have given a mixed reaction to the figures. Robin Terrell, managing director of John Lewis online, said “Online sales in December grew stronger as the month progressed. Sales were strong across the breadth of our product ranges with toys, gadgets and gifting all naturally performing strongly. Best-sellers included Biscuit the animatronic puppy, iPod docks and speakers, and fashions. This year we kicked off our clearance sale online on Christmas Eve for the first time ever and the results were very strong. We saw good sales through Christmas Eve, with a record peak in visitors to the site, and then through Christmas Day with the busiest hour being 9-10pm. Lots of customers were browsing, we believe to help them plan their shopping trips into our stores.”

Andrew Ellison at Schuh said “Online sales were well beyond our (cautious) expectations during the festive period, with an increase over the same period last year of over 30%. Our busiest day online in terms of visits to our web site was on Boxing Day and we also saw a substantial increase in visitors on 22nd December when we launched our online sale”.

Sarah Blair Gould, ecommerce manager at Boden, said “Trade in the run up to Christmas was in line with our expectations, which was good considering the tough trading conditions. Web traffic was up 37% year-on-year for December and our busiest day was December 12th which was our Sale launch day.”

Christian Robinson, managing director of said “December 2008 was an exciting month for Firebox. Monday the 8th December saw a record number of orders (in terms of volume and value) in the ten years since we began trading. Our peak day for traffic during 2008 was in December and in addition, sales were up on 2007 and were higher than expected over the Christmas period.”

Rowan Gormley, founder of Naked Wines said “Despite the credit crunch, people are buying wine, but they are buying more intelligently. Over 50% of our new customers in our first month of trading agreed to sponsor a winemaker, in return for a third discount on their wines.”

Steve Robinson, chief executive of M and M Direct, commenting on Christmas trading, said “The business did extremely well over the Christmas period against a strong comparative. Customers in these difficult times are embracing the internet and wanting great value products. Looking forward to 2009 we believe we are well positioned in a challenging market to offer our customers a continuing great range of products at great prices and it will be those retailers that manage to deliver value for money that will continue to grow.”

Shop Direct Group chief executive Mark Newton-Jones said “We are pleased with our trading performance during the Christmas period and particularly with the continued growth of our online business as this becomes the shopping channel of choice for many of our new and existing customers. We believe the retail outlook in 2009 will be difficult. However, we will continue to invest in and improve our broad range of products, our online platform and our customer service, whilst continuing to offer our customers flexible payment terms.”

And Gary Berg, managing director at Lighting Direct, said “Sales for December were lower than the previous year by approximately 10%. However the number of orders received was almost identical to last year which shows that in our market sector customers are still buying but spending less. The traffic and sales figures for Christmas Day and Boxing Day year on year were similar.”

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