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Online growth continues, prompting retailers to manage peak demand by bringing Christmas offers forward

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Online sales grew by 42% year-on-year in September, with multichannel retailers continuing to outperform online-only pureplays as internet shopping becomes a day-to-day habit, new IMRG analysis suggests.

Multichannel retailers in particular saw their online sales grow by 62.7% last month on a year earlier, according to the latest IMRG Capgemini Online Retail Index for September, while pureplay sales were 19.6% ahead. It seems that online is now a go-to channel for daily spending in a way that will have implications when it comes to Christmas. 

“Higher frequency purchases are… indicating new consumer behaviour patterns; basket values have dropped 10% in September, whilst year on year demand has remained over 40% growth, suggesting that the convenience of online channels is increasingly relied upon for day to day purchases,” said Lucy Gibbs, managing consultant, retail insight, at Capgemini. “This leaves an interesting landscape ahead of Christmas, where the prospect of double-digit growth on top of peak sales days could cause retailers to seek ways to ease the pressure on delivery channels.

“One way to address this could be to spread demand, with some stores notably bringing Christmas ranges forward, and the delayed Amazon Prime Day, to kickstart spending in the ‘golden quarter’.  It could pay to get ahead of the game this year.”

The levels of online growth appears to have started to normalise at a consistently higher level than a year earlier, but with month-on-month growth that is similar to previous patterns of spending, suggests the IMRG Capgemini Online Retail Index. It shows annual growth has fallen slightly behind the trend over both the last six months (+44.9%) and the last three months (+43.8%) – both periods showing how ecommerce has grown since the start of the pandemic. In June, ecommerce growth peaked at 51%. But it is well ahead of the 12-month average (+25.75%). 

Ecommerce sales were 5.35% higher than the previous month, August. A year ago, online sales in September 2019 were 6.5% higher than the previous month.

Andy Mulcahy, strategy and insight director at IMRG, the etail trade association, said: “September marked a new phase in the Covid outbreak as, after three months of easing restrictions and encouraging work / life / social interactions to resume, restrictions started to be reimposed. The situation is somewhat different to how it was in March though, and it didn’t trigger an upsurge in online sales. Growth is still very strong, but the weekly and monthly trend lines are fluctuating in line with what we’d expect to see this time of year.

“From here, that could change. October has seen much stricter measures come into force across the UK plus the new three tier system. With rising infection rates and potential for more restrictions, the attractiveness of physical retail may decline further. This makes Super Saturday – the busiest day leading into Christmas Week – problematic, as that volume will have to be diverted away from places like Oxford Street to elsewhere; most likely online, with serious proximity to Christmas, so retailers and carriers will be hoping people spread their spending out to avoid that bottleneck.” 

Menswear (+20.5%) was among the sectors that benefited year-on-year in August, with clothing up by 7.9%, although footwear sales were down (-6.9%). Health and beauty (+78.5%) and garden products (+76.3%) also benefited, while electrical sales grew by a very strong 101.8% following the releases of the PS5 and Xbox Series X gaming consoles. 

Capgemini’s Gibbs, said: “The hardest hit sectors during lockdown such as clothing have continued to pick up throughout September (+7.9%), boosted by increased activity and a turn in the weather. However, with increasing social distancing measures combined with the lack of festive events appearing in the calendar, we are likely to see further disruption to seasonal patterns as we head into winter.”

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