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Online shoppers hold out for price cuts

Confidence in Christmas deliveries and hopes for early promotions signal strong growth in December

GENERAL MERCHANDISE

Online shoppers hold out for price cuts

Confidence in Christmas deliveries and hopes for early promotions signal strong growth in December

The IMRG Capgemini e-Retail Sales Index reveals that British shoppers spent £5.3 billion online in November. Sales were up by a quarter (25%) compared to October, and by 11% compared to 2008.  November saw typical seasonal growth in online sales, with retailers starting to experience the pre-Christmas surge from the first week in November.

Despite sales increasing ahead of the festive season, year-on-year growth has slowed in 2009, in line with the maturing of the online retail industry over the last couple of years. This is also attributed to shoppers holding out for bargains, rather than reducing their online spend entirely.

The past two years have seen retailers putting in place seasonal price cuts and promotions in December rather than January, meaning that many consumers have chosen to delay their Christmas shopping this year.

Christmas falling on a Friday in 2009 may indicate that shoppers are allowing shorter delivery windows than usual, a sign of increasing confidence in retailers’ ability to deliver on time. Typically the first week in December is the ‘peak’ week for Christmas shopping online and there is some evidence that this may well be the case again in 2009. Indeed, Carl Clump CEO of Retail Decisions (ReD), card fraud prevention and payment processing experts says:

"We're witnessing a 17% rise in online retail sales through December, which shows how important the internet has become as part of our daily lives. We are also seeing online shoppers spending their Christmas money with the larger retailers, because they have confidence in the longevity of reputable brands."

Mike Petevinos, Head of Consulting for Retail at Capgemini UK, said:“November’s results show a solid growth for online retail in the run up to Christmas. Given retailers perceptions that consumers are holding out for bargains, this would suggest a strong December for online. The challenge will be to ensure that value is at the forefront of the Christmas message, with carefully designed promotions becoming the norm across the sector. Inspiring confidence in late delivery windows could also become a differentiator for those that have got it right.”

The accessories and gifts sectors showed the strongest growth in November. Sales of gifts more than doubled (105% increase) compared to October, and rose by 56% compared to last year. Sales of accessories online rose by 114% month-on-month and 68% year-on-year, perhaps as shoppers with less money to spend on Christmas parties compared to previous years, spruced up existing outfits with new accessories.

Year-on-year growth in the clothing, footwear and accessories sector rose 14%, although this is approximately half the rate of November 2008, indicating that this sector is reaching maturity.

Tina Spooner, Director of Information at IMRG said:“It is encouraging to see continued growth in the e-retail market which is clearly an indication of consumers’ confidence in the online channel. We would expect this positive growth in online festive sales to continue during December as retailers seize the opportunity of targeting their customers with promotions and offers in the final shopping days in the run up to Christmas. With many online retailers offering last order dates for pre-Christmas delivery as late as 23rd December, with a few promising same day delivery on Christmas Eve, even last minute festive shoppers can avoid the high street crowds this year.”

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