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Online shoppers spent more in October

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Online shopping in the UK grew at a healthy rate in October, two sets of figures out this week show.

According to the IMRG Capgemini eRetail Sales Index, shoppers spent £5.9bn over the internet in October, 14% more than in the same month last year. The figure also showed spending up by 7% compared to the previous month, September 2011.

Meanwhile, official figures from the Office for National Statistics showed that ecommerce continued to claim a larger share of the UK retail sales market, climbing to 9.5% of the total, up from 8.2% last October. The ONS's retail sales bulletin said an average of £561.5m was spent online each week, up from £518.7m at the same time last year.

The volume of UK retail sales grew by 0.6% compared to September and by 0.9% compared to last October. Meanwhile their value rose by 0.7% compared to September and 5.4% from last October. However, the British Retail Consortium warned that it did not recognise the "rosy picture painted by these results". Its own figures, released last week, showed total retail sales up by 1.5% compared to a year ago, and that customers were therefore buying less when the impact of inflation was taken into account. British Retail Consortium director general Stephen Robertson said: "The reality is disposable incomes are down on a year ago and customers are cutting back. Even food sales are suffering as people cut back or switch to cheaper brands in an effort to balance their household budgets. Stores are competing hard for what customer spending is available but consumers are overwhelmingly gloomy." He called on the Chancellor to hold back costs that he's responsible for, such as business rates and fuel duty, saying that: "At a time when youth unemployment has passed the one million mark, promoting growth in a sector where under 25s make up a third of the workforce should be a priority for the Government."

Meanwhile, the IMRG figures showed a rise in spending on online fashion, with sales peaking later than usual thanks to warmer weather at the beginning of the month. Clothing sales rose by 21% in October, compared to the previous year, and 11% on September, while accessory sales were up by 50% in October, compared to the previous year and 20% compared to September.

Tina Spooner, chief information officer at IMRG, said: “October’s performance was at the top end of our 12 to 14% forecast for the fourth quarter, so on the whole the outlook is positive. Low-value product sectors are continuing to boom, with accessories up 50% as consumers look to buy bags and belts to complement their outfits rather than replenish their wardrobes, and likewise health & beauty reached a record high of 53% growth.

“Clothing retailers in general had a slow start to the month; we usually see a peak around the end of September but it actually appeared near the end of October this year. This can be attributed to the very mild weather affecting consumer interest in their autumn ranges.”

Jason Russel Tanousis of Philip Kingsley Products said: “Philip Kingsley sales were up approximately 20% on last October, considering sales across all of our online retailers. We are not surprised the Index recorded such strong growth for the health & beauty sector last month…. we have seen this across all the online retailers we sell through.”

Alcohol sales were also strong, rising by 20% on the previous year and 27% on the previous month, and the electrical goods category was at its strongest since April, growing by 11% year on year, and 10% on September.

Faring less well was the travel sector, up by 5% compared to the previous year and down by 17% compared to the previous month. But those who were spending on travel were spending more, with average spending rising to £920 in October.

Chris Webster, head of retail consulting and technology at Capgemini says: “The market is growing in-line with our forecast, but the picture is mixed. Tough economic conditions are hurting retailers in commodity markets, such as electrical, as deep discounting is eroding profits. In other sectors, for example travel, online allows retailers to get ahead of the competition by using innovative strategies reach affluent consumers and make money even in sectors which overall are not performing well.”

Online sales from multichannel retailers grew by 13% in October compared to the previous year and by 4% on the previous month, while online and catalogue only sellers saw sales rise by 16%, year on year, and 11%, month on month.

Earlier this week IMRG and Capgemini forecast that in the region of £7.75 would be spent over Christmas, with almost half, £3.72bn, spent in the first two weeks. Last December, IMRG figures showed, £6.8bn was spent online. Its prediction for this year’s five week December shopping period, starting November 28, therefore represents a strong rise and when coupled with the October figures, suggests that total UK online spending will meet IMRG’s predictions of 16% growth for the whole of 2011.

Chris Simpson, chief marketing officer at Kelkoo, said: “The results of the October Index points to good news for online retailers as we move in to the key retail Christmas period. The bounce back for electrical sales last month could suggest consumers took advantage of discounted items for the home in time for the festive period.

“From our research, online sales are expected to account for almost one fifth of all UK Christmas spending this year, in stark contrast to offline sales which are forecast to fall by 2.1%. It will be interesting to see how the early Christmas sales that retailers have started will affect next month’s index, especially in the clothing and electrical sectors, and we can only hope that consumers buy more products at lower prices as opposed to reducing their overall spend.”

Russ Carroll, UK managing director of Shopping.com, said: “Online spending has continued to perform well and we expect this to persist through to the end of 2011 as consumers look online for their Christmas shopping. Once again, clothing has proved a consistently strong category for Shopping.com, increasing by 47% year-on-year and appearing yet again as one of the top items in our monthly barometer of the fastest growing search categories. Lingerie and cosmetics also experienced strong growth at 37% and 20% respectively, with shoes also coming in at 20%. Whilst other higher ticket items have not fared so well, interest in tablets has increased considerably at 372% as popularity in this latest gadget stays strong amongst online shoppers.”

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