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Ecommerce drove growth in the retail market this Christmas

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Online sales were the driving force behind growth in the UK retail market this Christmas, figures out this week suggest.

Today's Retail Sales report for December 2012 from the Office for National Statistics showed that retail sales as a whole put in their poorest performance for the month since 1998, with the sole exception of December 2010 when there were harsh winter conditions. In December 2012, found the ONS, the number of retail transactions grew by just 0.3% in the month, compared to the same month in the previous year. The amount spent was 0.1% down on the previous year.

But while sales were broadly flat on the high street, online was a very different story. The ONS figures suggest that internet retail sales grew by 15.5% in December to a weekly average of £830.3m. Some 10.6% of all consumer purchases took place online, the report found.

Meanwhile IMRG figures found that better-than-expected online sales lifted the ecommerce market by 17.5% in December, according to the IMRG. The “strong finish” meant the internet retailing market grew by 14% in 2012, compared to 2011, the etail association said in the IMRG Capgemini e-Retail Sales Index for December.

IMRG is now predicting growth of 12% in 2013, when it expects £87bn will be spent online, up from the estimated £78bn spent in 2012. Mobile commerce lifted off in 2012, with sales up by 304% on 2011.

“It was a very strong finish to the year for the online retail industry,” said Andrew McClelland, chief operations and policy officer at IMRG, “with growth coming in above expectation after a solid first half of the year.”

He added: “In spite of continued tough trading conditions as consumers concentrate on paying down debt, we are forecasting 12% growth for the market in 2013 as consumers look to get maximum value from every transaction.”

The IMRG research detected an unusual fall in the rate at which website visitors convert to buyers. Usually this rate would rise by around 1% between November and December but in 2012 it fell slightly. IMRG believes this suggested online research was now becoming a part of all buying decisions, whether the final purchase happened online or offline.

“Consumers are going to carry out a lot of research prior to making a purchase, so in order to secure their custom the challenge to retailers is around providing both the value and the experience that will make them stand out from the competition,” said McClelland.

Chris Webster, head of retail and technology at Capgemini , said Christmas 2012 had been “solid if unspectacular” and helped to compensate for “an otherwise challenging year.”

He said “staggering” rise of mobile commerce would continue in the year ahead. “Visits and sales from either a smartphone or a tablet device are nearly four times higher than last year,” he said. “We are reaching a point where we are spending longer on our phones shopping than making calls. This year we’ll see the role of mobile devices evolve as retailers use the technology as the default channel to reach us and personalise our shopping experience, whether we’re online at home, on the bus or even in store.”

Gareth Jones, group retail and strategy director at Shop Direct Group , said: “Looking back at 2012 as a whole, the big themes of the year were mobile and personalisation and both will continue to be at the forefront of our ecommerce strategy for 2013 and beyond. In particular, the rapid adoption that we are seeing among customers of the more mobile 7” tablet offers exciting new opportunities to connect with customers wherever and whenever they choose to shop.”

Commenting on the ONS figures, Peter Saville, partner at advisory and restructuring firm Zolfo Cooper said: “Today’s figures show a disappointing end to a tough year for many retailers. While 2013 appears to be heading in a similar direction, with the likes of Jessops, HMV and Blockbuster being the first to fall victim, the fact that many, including John Lewis, Dixons and Asos, are still performing well means that all is not lost.

"In 2013 it is imperative that companies keep pace with changing consumer habits and continue to develop their in-store experience, quality and convenience as well as providing a comprehensive service online. Retailers need to take charge and develop a unified multichannel approach – brick, click and collect, mobile and ecommerce - to provide a flexible business model that accommodates customer needs. Moving into the new year, firms should prioritise such an approach, with e-retail industry experts predicting online shopping to increase by 12% in 2013.”

Meanwhile, NCR senior director Gopal Kutwaroo, commenting on the ONS figures, said: "As the figures show and these stores have seen, it is evident that consumers are increasingly preferring to shop online, due to the convenience and ease of comparing prices. However ‘online’ should not be seen as a threat to retailers with a large store presence.

"Not only do most retailers already have strong online presences of their own, but the smartest are working hard to ensure integration between online and store, making sure customers get a consistent experience however they are interacting with the brand. Online and mobile channels can be used to help drive customers in-store, while many retailers are already starting to implement wi-fi to enable customers to use online in their stores, often for consumers looking to compare prices or share possible purchases with friends for instant feedback. Those retailers who can offer a quality, consistent customer experience irrespective of channel, will be the winners in the long run.”
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