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IREU Top500 The Customer Report: 2018

IREU Top500 The Customer Report: 2018

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Online sales rise by 14% while inflation hits overall sales: ONS and IMRG

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Online sales rise by 14% while inflation hits overall sales: ONS and IMRG
Online sales rise by 14% while inflation hits overall sales: ONS and IMRG
Online sales grew by 14% in September, compared to the same time last year, according to two sets of new figures out this week.

Both the IMRG Capgemini eRetail Sales Index and the ONS's Retail Sales report for September 2017 detected the rise in online sales. The ONS said that 17% of sales took place online during the month. Overall retail sales across the industry grew by 4.4% in value compared to the same time last year, but fell by 0.5% compared to last month. The effect of inflation was shown as the quantity bought grew more slowly, by 1.2% on last year, and fell by 0.8% on last month.

Kate Davies, ONS senior statistician, said: “September’s retail sales saw a monthly decline of 0.8%, reversing August’s growth. However, there is a continuation of the underlying trend of steady growth in sales volumes following a weak start to the year, and a background of generally rising prices.

“These increased costs are reflected in the more rapid growth in the amount spent when compared with the quantity bought.”

The fastest online growth came, said the ONS, in the textile, clothing and footwear sector, where ecommerce sales grew by 39.1%, to account for 16.5% of all retail sales in the category. Department store sales grew by 9.4% to account for 14.5% of sales, and food sales by 10.3% (5.3% of retail sales in the sector).

There was also evidence of inflation in the IMRG Capgemini figures. While overall sales grew at their third-fastest rate so far this year, categories from electricals to gifts saw sales slow significantly.

Electricals saw sales come in 5.6% lower during the month – the sixth consecutive month of negative growth that the sector has seen, and its first in September since the index began. This, said IMRG, may mean the sector is experiencing the impact of inflation more sharply than other sectors, thanks to the relatively high cost of its products. It says several electrical manufacturers have pointed to prices rising as a result of inflation, and that may in turn means shoppers are waiting until Black Friday, and hoping for discounts on more expensive buys.

Inflation may also be playing a part in the gift sector, where growth of 1.9% is much lower than the 33% lift enjoyed by this sector last September.

Bhavesh Unadkat, principal consultant in retail customer engagement design at Capgemini , said: “While 14% seems high, it hides the impact of inflation. When you look at how much faster online is growing than multichannel, it implies that people are currently more price sensitive, comparing deals rather than buying directly through retail. Couple this with September’s cross sector spending habits and it indicates a strong focus on essential spending habits and it indicates a strong focus on essential purchases, with gifts slowing significantly and electricals continuing to decline. It could in fact be argued that electricals now serve as an indicator of consumer confidence, especially when you pit the sector’s performance against the previous year’s across the last six months.”

Justin Opie, managing director of IMRG , the etail trade association, said: “There are several notable differences between the online sales performance of online-only and multichannel retailers. While the online-only retailers are enjoying far higher conversion and sales growth currently, the average spend on multichannel retail sites is much higher. It’s possible that the online-only retailers are benefiting from the lingering perception that the best deals are available online, so as pressure on their available spend increases, shoppers look to the ‘pure’ online brands over the high street alternatives. Conversion on multichannel retail sites may also be suppressed by use of store locators and a higher potential for abandoning a basket online, where they were carrying out research, only to complete the purchase in a conveniently-located store.”

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