UK Online retail sales set new record

 
The IMRG Capgemini Index broke the 7000 barrier for the first time in December, reaching an all time high of 7099. The UK e-retail market grew a healthy 17% year-on-year, which is higher than the 14% annual growth recorded in December 2008.

However a downward trend in the so-called conversion rate, which measures the proportion of web visits translated into actual purchases, pointed to an increasingly competitive market, with consumers browsing a number of sites before committing to a purchase.

The conversion rate fell 25 per cent on average between 2008 and 2009, with just one in 20 visits converted into sales in December 2009, compared with one in 15 in December 2008.

“People are becoming more savvy, using more comparison websites and doing the work themselves. The proliferation of websites you can shop on is so significant, why would you just go to one site?” said Karen Howland, retail analyst at Barclays Capital.

She added: “The trend will inevitably increase as people become more comfortable with online, though it will be more common in electricals – where there are many suppliers – than in soft goods like fashion, where pieces tend to be more unique.”

Online sales jumped 17 per cent year-on-year in December, to a record £5.46bn ($8.83bn), as the icy weather encouraged people to shop from home and high-street retailers improved their online offering.

Retailers such as John Lewis and Next, with both a store and online presence, performed better in December than their web-only competitors, with monthly sales up 13 per cent on November at multi-channel retailers, compared to an 8 per cent fall at pure-play rivals.

Analysts said the shift reflected a rush to reliability, as consumers sought out well-known brands amid fears of late deliveries.

“This shows both the high value consumers place on a multi-channel proposition, particularly when it comes to gift returns, and the trust advantage our high street brands have,” said Jon Parry, retail consultant at Capgemini.

“If you’ve got brand loyalty and customers who trust you, then they know what they see online, they’ll get,” said Simon Dawes, head of merchandise and selection at John Lewis Direct, which saw its sales rise 20 per cent year-on-year in December.

IMRG Capgemini also forecast growth of 13 per cent in 2010, compared to a rise of 14 per cent in 2009, underpinning evidence of slowing growth in online retail as the market matures.