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Cold snap rounds off an impressive 2010 with a record high

£6.8 billion spent online during December

GENERAL MERCHANDISE

Cold snap rounds off an impressive 2010 with a record high

This equates to a 7% monthly increase and an increase of 25% year-on-year and during 2010, £58.8 billion was spent online, representing an 18% increase on previous year.

Forecast for 2011: 18% growth and approx £69 billion in total e-retail sales.
The latest figures from the IMRG Capgemini e-Retail Sales Index reveal that shoppers in the UK spent a total of £6.8 billion online during December, equivalent to £111 per person. Sales were up by 7% on November and by 25% on December 2009, with the Index value reaching a record high.

The results round off what has been an impressive year for online retail. A total of £58.8 billion was spent online in 2010, which resulted in the Index increasing by 18%, far outstripping the original prediction of 13%.
The December figures showed that despite the dire predictions during the run up to the festive season, online retailers had a very successful Christmas, resulting in an above average year-on-year growth in nearly all sectors. This impressive growth can be attributed to two major factors, the impending increase in VAT and of course the coldest recorded December in the UK for 100 years[2].

It seems that as the snow fell, shoppers across the country opted to buy online, instead of battling the elements to the high-street. This trend had a positive impact for all online traders, including those with a multi-channel proposition; House of Fraser reported 120% growth in online sales compared to the same period the year before. Similarly, John Lewis and Marks & Spencer reported exceptionally strong results.

In terms of specific sectors, the harsh conditions had an inevitable impact in sales for clothing, footwear and accessories. As the country looked to wrap itself up in winter coats and chunky scarves, the sector saw a year-on-year increase of 40%: the strongest growth for this sector for 19 months. Clothing retailers also experienced a massive 50% leap in conversion rate, suggesting consumers are not just surfing the net to window shop, but researching the best price and placing an order.
Another noteworthy sector is alcohol, which, in keeping with the festive and party season, saw the largest growth, boasting a massive month-on-month leap of 32%. What's a little less expected is the year-on-year growth as the sector saw a significant 36% increase from December 2009.

Chris Webster, head of retail consulting and technology at Capgemini says,"Online sales in December have grown again off the back of a very impressive November. This is down to two main reasons. Firstly, the spike in sales can be attributed to the season; not only is it traditionally the strongest month for retail but coupled with the heavy snow fall clearly led to many consumers staying at home to do their Christmas shopping. Secondly, the ongoing trend of consumers putting down the car keys and turning on their computers is only set to continue particularly as consumers use the power of the web to make their money go further as the economy recovery remains fragile."

James Roper, Chief Executive at IMRG, commented,"December saw an incredible jump in online sales as a result of the weather conditions and it's reassuring to see that despite the coverage of delivery problems, consumer confidence was not affected. Growing confidence and reliance on e-retail during times of adversity, whether that's harsh weather conditions or belt-tightening as a result of the economy, has been reflected in the impressive growth throughout 2010."

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