Online sales grew sharply in May, lifting by 19.4% compared to the same time last year in a month that saw warmer weather, a Royal Wedding and the FA Cup Final, according to the latest IMRG figures.
The growth takes the three-month trend for ecommerce growth to 19%, between March and May, and, said the IMRG Capgemini e-Retail Sales Index, this is the fastest growth seen since 2010. That’s well ahead of the six month trend of 15.3% and the 12-month average of 13.8%.
Conversion rates improved, rising to 4.8% from 4.6% last year.
Andy Mulcahy, strategy and insight director at IMRG, said: “Growth for the online retail market has been exceptionally strong so far in 2018, with May’s result being the highest for that month in eight years. Things have been tough on the high street recently, though better performance was reported in May. This may have been a bit prompted by the mood of national celebration last month and it’s telling that when physical retail does well, online does even better, recording its highest growth in 18 months in May. It’s becoming increasingly clear that shoppers are favouring online channels over physical ones to a greater degree than they used to, which is accelerating the pace of change for multichannel retailers.”
The fastest growth came in the footwear (+54.4% year-on-year) and garden (+20%) categories, with growth in gardens reaching 74% when temperatures hit new records in the first bank holiday week of May. Health and beauty sales were also up online, growing by 23% over the month.
Bhavesh Unadkat, principal consultant in retail customer engagement at Capgemini, said UK sunshine had “over-indexed” in May while temperatures also improved, adding to optimism already felt thanks to the Royal Wedding and the FIFA World Cup.
He added: “According to GfK’s overall Consumer Confidence index, consumer confidence is up +2 points versus last month, with a positive outlook for the year ahead despite the uncertain economic backdrop. With this in mind, retailers need to maximise the opportunities around the uplift in customer spending and make the most of influential external factors through relevant messaging and offerings to their customers to secure their market share.”
Looking at the longer-term trend, the IMRG’s Mulcahy said: “There is nothing new in online taking a greater share of sales, of course. The question is what happens to physical retail. Traditional shops won’t vanish entirely – there will always be some level of demand for them – but how high streets and other retail spaces evolve more generally in response to lower shopper interest is a matter for some debate. Many speak about focusing on in-store ‘experience’ but in many cases the solutions don’t seem to be very different from what was there before. It seems likely that retail is in for a rocky period of readjustment that might take several years, before blueprints for a successful physical retail space become more apparent.”