Online retail hits 80% ‘hypergrowth’

The IMRG (Interactive Media in Retail Group) reports that its retail index burst above 4000 for the first time (4111) in July 2007, indicating that UK e-retail sales had exceeded £4 billion in a month for the first time (£4.2bn).  

Sales for the month were £1.86 billion higher than in July 2006.

In the high street, the average value of weekly sales in July was £5 billion, 3.3% higher than July 2006, according to National Statistics.

Online, the highest sales growth was in electrical goods:  the IMRG Electrical Index recorded sales 102% higher than a year earlier.  

Pixmania's Ulric Jérome, MD France & Northern Europe, said: "June and July are key months for sales of electrical products on the internet, as people buy electronic items for their summer holidays: Digital Cameras, MP3s, Laptops…  Since the beginning of the year we have seen that confidence in internet shopping has reached a very high level in the mindset of consumers.  

“Our feedback shows that most UK customers are now coming directly to our web shop without first shopping / looking around in high street stores!  The reality is that online retailers are able to secure more aggressive prices for their customers: this along with the vast quantity of product information available online and the ease of the buying process that avoids having to queue in stores is the winning mix of a smarter way to shop!  

“Shoppers recognize that most internet sites are becoming more and more professional, trying to get the best of the offline experience online.  This reality is directly reflected in our UK conversion rate (sales divided by number of unique visitors), which has increased by 59% from last year."

Clothing sales were also strong online:  the IMRG Clothing / Footwear / Accessories Index was 56% higher than a year earlier and reached a new all-time high, recording growth of 1,587% in the 78 months from February 2001 to July 2007.

Jo Evans, IMRG's managing director who directs the Index programme, said:"IMRG was surprised by the strength of July's growth, so checked and rechecked the figures …then checked them again. This data is sound.

“It reveals the extent to which the retail sector is being transformed by frictionless e-commerce.  Major brands are bringing on-stream the next generation of slick new internet retailing services, and consumers are flocking to use them.  It's big players' success that is now driving e-retail growth and boosting the Index."

Several factors contributed to July's very strong growth, including the very wet weather which inhibited traveling, encouraged people to shop online, and forced many people to replace water-damaged goods.

Many new-season catalogues are published at this time of year, their orders being taken largely online these days.  Major new e-retail resources have become available since last July, such as new or updated websites with greatly expanded product ranges.  

Many Index participants also report rising numbers of new customers as a result of the still strong uptake of domestic broadband, and because existing internet shoppers are expanding their online buying activity as they become more confident in using the channel.

July's 80% year-on-year Index growth is in stark contrast with the average for the preceding 12 months, of just 36%, and builds on an accelerating growth trend observed throughout 2007: Jan = 16.5%; Feb = 34.7%, Mar = 40.9%, Apr = 54.4%; May = 48.0%; Jun = 55.1%.  Looking back, annual growth in July 2006 was 35.4%, while in 2005 it stood at just 25.3%

IMRG's chief executive, James Roper, comments:  "During the early years of this decade the e-retail industry was starved of investment - a backlash from the dot.com bust of 2000. Although we saw that consumer demand was outstripping internet retail supply, when annual growth fell to just 9.4% in December 2004 and 13.4% the following February, many people assumed that the sector had peaked.  

“Then new investment began to arrive:  at first just a trickle of new money and a handful of IPOs appeared, but now, two years later, there is a flood of serious capital being applied to building e-retail infrastructure.  July's extraordinarily strong market growth spotlights the high level of consumer demand, and yet we are really only just beginning to see basic facilities arriving, and still have nowhere near enough capacity to meet shoppers' appetite for e-retail, especially in areas such as parcel delivery, where huge improvements need to be made.

“With nearly half of homes yet to acquire broadband, and massive potential for improvement available in every aspect of it, strong e-retail growth is set to continue for many years to come.  Web 2.0 is propagating Retail 2.0."

IMRG INDEX SECTOR CLASSIFICATION
The IMRG Index records UK online retail sales of the products and services listed in the IMRG Index Sector Classification, as set out below:

- Beer / wine / spirits
- Books
- CDs / tapes / records
- Clothing / footwear / accessories
- Computer hardware / peripherals / consumables
- Consumer electronics
- Digital downloads (e.g. music, software)
- Flowers
- Food, beverages and household supplies
- Furniture
- Garden / DIY
- Health and beauty
- Home appliances (e.g. washing machines)
- Household goods (e.g. kitchenware, bedding)
- Jewellery / watches
- Software
- Sporting goods
- Tickets (e.g. cinema, theatre, events)
- Toys
- Travel (e.g. flights, holidays, hotels, car hire)
- Video games
- Videos / DVDs

THE RESEARCH
The 'e-retail sales' data is based on the IMRG Index, which has collected hard UK online shopping sales data since April 2000.

Source:   www.imrg.org