UK online retail sales hit 7 year high in January

UK online retail sales were up +12 per cent year-on-year (YoY) in January, according to the latest figures from the IMRG Capgemini e-Retail Sales Index.

This represents a steady start to the year for online sales, having built on a solid performance in January 2016, when growth was +15 per cent.

Key findings:
• UK online retail sales grew +12 per cent in January
• The average spend was £85 – highest January since 2010
• Second month of negative growth for electricals sector

The average basket value (ABV) for online retailers was recorded as £85 in January 2017 – up from £79 a year earlier and making it the highest value for that month since January 2010. By comparison, the average in 2016 was £81.*

While multiple sectors – including clothing, gifts and accessories – recorded a rise in ABV, the electricals sector dropped to £129, down -12 per cent on January last year. The same sector also continued its recent run of low growth with online sales down -9 per cent year-on-year (YoY), falling for the second month running.

Looking at other sectors, sales growth for clothing retailers was up +11 per cent YoY – a respectable figure, but actually the lowest growth rate for this sector since March 2016. Growth for the gifts sector was at an eight-year high however, up +62 per cent YoY, making it the highest growth for this sector since December 2009.

Justin Opie, managing director, IMRG said, “January’s figures reveal a steady start to the year, but 2017 is not without its challenges for online retailers. The most pressing one relates to the devaluation of the pound following Brexit, as it means price rises are looming for an industry where retailers often get pressured into a cycle of discounting to stimulate sales activity among customers. One area where we may see a big impact is electricals – already having a tough time online with sales growth down -8.5 per cent in January and the average basket tumbling. Sonos, Microsoft and Apple among others have recently announced big price hikes of 20 per cent and over to come, so retailers in this sector may continue to have a difficult period to navigate going forward.”

Bhavesh Unadkat, Principal Consultant in Retail Customer Engagement Design, Capgemini said, “A growth rate of +12 per cent for online retail is pretty strong. However, when compared with the growth rate for the last quarter, it has certainly steadied. The rise in inflation will raise caution among shoppers and with price hikes expected across petrol, electricals and food, this caution will remain for some time to come. The focus for retailers in 2017 should be on ensuring they can capture as much of the UK market share as they can, as well as exploiting international sales, should the pound weaken.”