Ecommerce claims biggest share yet of the retail market in November: BRC

Ecommerce claimed its biggest share yet of the retail market in November, new British Retail Consortium (BRC) figures suggest.

Online accounted for 21% of all retail sales during the month – the highest proportion of sales ever recorded, according to the BRC-KPMG Online Retail Sales Monitor for November 2014.

Helen Dickinson, director general of the BRC , said: “This month brings fantastic news for retailers who have worked hard on their online presence, as the online penetration rate of non-food sales is at an all-time salesrecord. Every £1 in £5 of non-food purchases is spent online. Online sales are also contributing a larger proportion of growth to non-food sales compared to in-store.”

Online sales grew by 12% during the month, compared to the previous November, and taking the three-month average online growth figure to 11.6%. At the same time, total retail sales grew by only 0.9%. Total sales were up 2.2%, against a 2.3% rise in November 2013 – the best performance in three months.

Dickinson said Black Friday was “the retail event of the month,” with retailers offering discounts online and in-store. “The high volume of traffic to websites meant consumers also bought a large amount of full-priced items and not just those on sales. Online sales growth was good for the month but there may have been a distortion caused by Black Friday with consumers delaying purchases until the end of the month in the hope of grabbing some bargains.”

But, the figures showed, online growth “almost came to a standstill” in the week ahead of Black Friday as shoppers looked forward to deals. “Aggressive” deals were particularly common among fashion retailers who used the day to clear stock that hadn’t sold in a warm autumn.

Click and collect emerged as a favourite shopping option, with many shoppers buying online to collect the same time on the way from work. However the rate of growth was slower in November than in December, and lagged behind the 12-month average of 14.5%. Nonetheless, said the BRC, the growth remained impressive since it built on growth of 16% recorded in the previous November.

Health and beauty was the fastest growing category, followed by household appliances.

David McCorquodale, head of retail at KPMG , pointed out that some websites had fallen short in the rush. “Retailers’ online systems have been tested and some have been found wanting. The sheer weight of consumer demand caused some websites to buckle under the pressure and these retailers need to sort this capacity issue out and quickly or face losing sales to competitors with more robust systems.

“Online sales will help to drive growth for retailers this Christmas and are a crucial element of their overall strategy.”

Commenting on the figures, James Batham, head of retail sector at law firm Eversheds, said: “Retailers hoping to end 2014 on a high needed to hit the ground running for the all important Christmas trading period; and it appears that sales on Black Friday, on 28 November, certainly helped.”

He added: “Britain’s recent economic recovery has to date mostly been driven by consumer spending. Whilst wages have only grown slowly, a fall in inflation to its lowest level in five years has helped restore purchasing power to a degree. Consumer confidence greatly affects spending and the Chancellor’s recently announced changes to SDLT [stamp duty] (which it is claimed will benefit 98% of people purchasing a house) can only benefit and increase such confidence.

“Whilst the increase in sales figures is encouraging, the real question is what is being sold and at what price? Retailers have been offering substantial and sustained discounts for a number of months in an attempt to offset low sales as a result of a mild winter. It will be interesting to see the effect that has had on profit margins. For the moment, it would appear that consumers are benefiting, whilst retailers are working hard to adapt to the changing marketplace, consumer demands, increased competition and technology.”

Steve Morrow, VP UK & Ireland at data integration company Informatica, said: “In a small margin industry, Christmas can make or break the high-street. Whether the result of advertising fiction or customer demand, the latest BRC figures reveal that the hype around Black Friday reached an all time high, delivering a welcome boost to UK retailers. Now brands need to concentrate on how they can maintain this initial momentum by capitalising on the Christmas cheer of consumers.

“The success of Black Friday sales has demonstrated that personalised offers and precision stock management make all the difference. However, balancing profitability with promotions and logistics is a complex affair, particularly at Christmas when any delay could result in lost sales.”