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Strong online retail performance in May despite decline in basket value

New figures have revealed that the online retail market grew by 16% year-on-year in May and by 5% on April 2013 despite strong comparatives from the same month last year which included the build-up to the Queen’s Diamond Jubilee.

GENERAL MERCHANDISE

Strong online retail performance in May despite decline in basket value

Figures from the IMRG Capgemini e-Retail Sales Index show that conversion rates in May soared to 4.9%, excluding travel, which was an increase of 20% compared to the same month in 2012 and 2011. The rise coincided with a fall in average basket value, which excluding travel, stood at £77 from January to May 2013, down from £83 and £86 for the same period in 2012 and 2011 respectively. 

Looking at individual sectors, clothing saw 16% year-on-year growth in May, as the increase in temperature encouraged consumers to update summer wardrobes. The warmer weather also boosted sales in the home and garden sector which recorded a 41% increase in like-for-like sales compared to May last year.

The figures reveal that online-only retailers outperformed their multi-channel counterparts in the month. Online retailers saw sales rise by 18% year-on-year in May while retailers with both a physical and online presence recorded a 16% rise. This suggests increased confidence among consumers in the internet as a transaction medium, and is a result of the increased adoption of technologies and services such as tablets and PayPal introduced by online retailers.

The M-Commerce Index recorded a year-on-year growth of 148% in May. Although strong, this was lowest annual growth since the Index began.

Tina Spooner, chief information officer at IMRG: “Due to the ease with which customers can browse between retail sites in search of the right offer for them, pricing has become more competitive than ever. While the online retail market continues to grow at a faster-than-expected rate, customers are spending less per transaction which impacts on the profit margins for the business. In fact, the average online basket value year-to-date is down over 10% compared with the same period in 2011. This declining trend is not likely to shoot up again quickly, as the expectation of value goes hand-in-hand with shopping online.”

Chris Webster, VP, head of retail consulting and technology at Capgemini added: “The online sales reflect the ongoing economic climate. Whilst there has been a slight growth in average earnings, it is still running behind the current rate of inflation of 2.4%; as a result Brits have to be savvier shoppers and embrace the savings that can be found online.

“The challenge to the high street is that once shoppers get used to the convenience of online and the ability to make their money go further, this behaviour will continue even as health is restored to the economy.”

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