Essential reading for retailers and suppliers in the home improvement market

Online spend reaches highest rate in 2018

Published: 3 August 2018 - Fiona Garcia
 

Shoppers are spending more online than ever this year, as internet retail records a 16.8% year-on-year growth during H1, with garden one of the top-performing categories.

The figure is the highest growth rate for the trading period in eight years and the average basket value of £94 is the highest since records began, according to the Capgemini IMRG eRetail Sales Index.

This sits in stark contrast to the sustained downturn recorded on the high-street so far this year (Feb-Jun). E-retail’s year-on-year growth was also above the five-year-average of 14.1%.

 

Despite the UK being hit by freak cold weather moving into Spring, online retail grew by +15.3% (YoY) between January and March, with the reduced high street footfall driving shoppers to home spending. However, as the weather picked up and the UK experienced some unseasonably hot weather in April, online retail sales went from strength-to-strength, with a +18.2% (YoY) growth between April and June.

In fact, online-only retailers outperformed multi-channel retailers in four out of the six months.

Some sectors appeared to particularly benefit from the unpredictable weather. Garden enjoyed a YoY growth of +24.9% overall, its strongest first half since 2014, with a +33.7% growth in the warm months of April - June.

Clothing has enjoyed consistent growth during the year so far, recording +16.3% growth (YoY) in Q1 and +17.8% (YoY) in Q2 for an average of +17.1%.

IMRG strategy and insight director Andy Mulcahy: “The performance for online sales in the first half of the year has been a lot stronger than anticipated. There are a number of factors that may be influencing that – the extreme weather events (both hot and cold), the Royal Wedding, World Cup etc – and it might be possible that the feel-good elements associated with some of those events has encouraged people to spend a bit beyond their means.

“This could mean that we see a pinch on shopper spend as we move through Q3 – though the weather in July has been incredibly hot – which may lead to an imbalance in online retail growth between the first and second halves of the year.”

Despite the impressive growth of online retail, conversion rates for online retailers actually decreased overall every month other than May. This could be accredited to the continued trend of online shopping via smartphone devices, which are accounting for a larger share of total online sales but feature lower (albeit increasing) conversion rates. Indeed, spending via smartphone devices was up +39% against last year during Q2, although growth rates are inevitably starting to slow as this channel reaches maturity.

Capgemini principal consultant in retail customer engagement Bhavesh Unadkat said: “The year started with a lot of doom and gloom and uncertainty around retail.  What has been encouraging is how well online retail has performed in H1, particularly in seasonal categories like clothing and garden.  These two sectors have delivered higher basket values (+38.0% and + 19.6% YoY respectively), with consumers becoming impulsive in their purchases as they refreshed summer wardrobes and prepared for more time spent outside.

“Despite that, online-only retailers outperformed multichannel retailers during most of H1, with average growth at +18.6% and +14.7% respectively, multichannel actually closed the gap on last year’s YOY growth. Basket value growth was also stronger for multichannel retailers, with a +4% (YoY) increase in average basket value to £100.77, compared to only +2% (YoY) for online only retailers at £87.77.  It demonstrates the continued importance of an omni-channel presence for retailers – a focus on connected retail will help ensure that the ecommerce sales performance outlasts the good weather.”

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