Retailers including Laura Ashley and Argos this week reported brisk online trade in the first half of their financial years. But both showed ecommerce growing well ahead of flat or falling sales across the rest of their businesses.
Fashion and homewares merchant Laura Ashley said ecommerce sales were up by 9.2% to £16.8m in the half-year to July 31. Ecommerce and mail order sales now represent 15.9% of its total UK sales. But total group sales were up by only 0.1% to £135.3m, while UK retail sales fell by 1.1% to £120.1m, though this was a 3.5% rise on a like-for-like basis. Profits were up strongly by 28% to £7.3m, before exceptional items.
Laura Ashley chairman Tan Sri Dr K P Khoo said: ” These results show that our multichannel and international strategies are working well. These, along with our strong balance sheet and ongoing operational efficiencies, give me confidence, notwithstanding the continuing economic headwinds, that we will meet the board’s expectations for the year.”
Home Retail Group said 34% of Argos’ sales now came over the internet in the 13 weeks to May 28, up from 32% a year before. However its second-quarter trading statement showed total sales down by 7.1% to £859m in the quarter, and in the first half of the year they fell to £1.7bn, down by 9.1% on a like-for-like basis.
Sister company Homebase also reported a 0.6% dip in first half sales, to £840m.
Terry Duddy, chief executive of Home Retail Group, said: “Overall the performance in the quarter was in line with our expectations. Argos’ sales continued to be impacted by the decline in the consumer electronics market, while at Homebase, after a good first quarter which saw strong seasonal sales, the second quarter was more challenging.
“Whilst continuing to plan cautiously, we are in good operational shape as we approach the Christmas trading period. We continue to develop and invest in our customer proposition across the businesses.”
Yesterday, Supergroup, owner of the Superdry brand, said in an interim management statement that its internet sales continued to grow in the first quarter of its year. Total group sales rose 66% to £54 million in the three months to July 31.
Meanwhile, research from IMRG and Capgemini may shed light on a change in the way shoppers buy online. It pointed to online conversion rates falling by 55% in five years. It says the average online conversion rate for retailers in 2006, as measured by the IMRG Capgemini eRetail Sales Index, was 8.4% but that it is now 3.8%. The two say the change is down to consumers who now browse over the internet, researching products on a variety of engaging retail sites, rather than just seeing the internet as ‘another’ purchasing channel.
Tina Spooner, chief information officer at IMRG said: “The average online shopper today is making more considered purchases, often visiting several websites in order to compare products before deciding to buy.”
Chris Webster, head of retail consulting and technology at Capgemini said: “To understand why the online conversion rates have halved in the last five years we need to consider the various factors which have influenced consumer behaviour over the same period. The growth of the multi-channel retailer is certainly a major factor – shoppers can browse at their leisure and then buy in store. This behaviour has been encouraged by the recession which has driven greater price sensitivity and the need to research items before making a purchase.
“The e-retail space itself has also evolved – consumers are now offered far greater interactive content than they were five years ago, which means shoppers don’t just go online to shop. Retailers need to draw the window-shopper in to buy, by developing a customer experience which is personal and provides relevant offers based on their shopping habits.”
