While the high street reported the steepest year-on-year drop in footfall since 2010, UK online retail sales have experienced dramatic growth.
Online sales grew by a storming +18.9 percent year-on-year (YoY) in March, according to the latest figures from the IMRG Capgemini e-Retail Sales Index. Marking the highest year-on-year growth since November 2016, March’s results round out a hugely successful first quarter, which saw average growth perform well above the 2018 forecast (+15.3 percent vs. +9 percent).
A number of key factors helped drive the month’s online sales – starting with the continued cold weather from the ‘beast from the east’, and ending with the early Easter bank holiday. Far more significant of the two, weekly analysis showed that growth doubled in the final week over Easter – surging from a steady +13 percent to +27 percent.
While all sectors showed year-on-year growth in March, there were a few standout performances. Likely linked to the bank holiday weekend, both Clothing and Beer, Wine and Spirits saw increases of +17.2 percent and +27.3 percent respectively. For Beer, Wine and Spirits this was the highest jump in the last five years. Perhaps less predictably, Electricals also had a very strong month, reversing a five-year trend of decline to record growth of +21.9 percent. In a month where Samsung launched its Galaxy S9, this could signify a concerted effort by smartphone manufacturers to increase their promotions.
Andy Mulcahy, Strategy and Insight Director at IMRG, said:
“It’s possible to read this month’s results as a simple story of online continuing to benefit from the decline of the high street – which is nothing new of course, but it may be that we are seeing an acceleration of this as we’ve moved into 2018. At the same time it could just be a blip – Easter falling in March will likely have pushed up online growth (and, by extension, it may come in far lower in April) plus the weather has at times brought heavy snowfall and prolonged rainfall.
If the strong growth is sustained into April, it would be tempting to conclude that we may have entered a new retail era – where store portfolios are going to be reduced faster under a far more radical programme of store consolidation than we have seen thus far, with digital transformation going high up board agendas and more ‘Digital Transformation Director’ job titles appearing.
But what does that mean for the high street? It’s important to remember that shopping centres have generally performed better than high streets recently, so it’s not that physical retail spaces can’t work. The question is – if retail were to start again entirely from scratch tomorrow, what would a retailer’s physical space look like? Would they be shops in the traditional sense, using all the space to market stock? Would we actually even create high streets again?”
Bhavesh Unadkat, Principal Consultant in Retail Customer Engagement with Capgemini added:
“While the comparatively stronger growth of multi-channel retailers this month further supports the weather’s role in driving footfall away from the high streets, it also highlights the potential value and relevance of maintaining some form of physical presence in addition to a digital one. The trick for retailers is to figure out how the two can successfully work in combination, and what role each must play. We’re already seeing the start of this interplay in the trend for showrooming, but that is just one possible innovation of many.”