UK online retail sales up 14 per cent but electrical sector is struggling

Online retail sales in the UK grew by some 14 per cent for the month of September year-on-year, according to latest figures by IMRG Capgemini e-Retail Sales Index. And despite being the third-strongest growth rate seen thus far in 2017, industry experts have pointed out that not all sectors are doing so well.

The electricals sector suffered its first negative year-on-year growth , down 5.6 per cent for the month of September. It marked the sixth consecutive month of negative growth for this sector, which may be experiencing the impact of inflation more notably than some other sectors due to the relatively high cost of products. Several electrical manufacturers have already signalled that they have had to raise prices in response to inflation, which may be leading shoppers to wait until Black Friday to make more expensive purchases.

Bhavesh Unadkat, principal consultant in retail customer engagement design, Capgemini said that the 14 per cent figure had to be put in to context and that it hides the impact of inflation. “While 14% seems high, it hides the impact of inflation,” he said. “When you look at how much faster online is growing than multichannel it implies that people are currently more price sensitive, comparing deals rather than buying directly through retail. Couple this with September’s cross sector spending habits, and it indicates a strong focus on essential purchases, with gifts slowing significantly and electricals continuing to decline. It could in fact be argued that electricals now serve as an indicator of consumer confidence, especially when you pit the sector’s performance against the previous year’s across the last six months.”

Meanwhile Justin Opie, managing director, IMRG said: “There are several notable differences between the online sales performance of online-only and multichannel retailers. While the online-only retailers are enjoying far higher conversion and sales growth currently, the average spend on multichannel retail sites is much higher. It’s possible that the online-only retailers are benefiting from the lingering perception that the best deals are available online, so as pressure on their available spend increases, shoppers look to the ‘pure’ online brands over the high street alternatives. Conversion on multichannel retail sites may also be supressed by use of store locators and a higher potential for abandoning a basket online, where they were carrying out research, only to complete the purchase in a conveniently-located store.”

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