October online sales growth at highest rate since Black Friday 2014
The IMRG Capgemini eRetail Sales Index has revealed the value of online retail sales grew +18.9% year-on-year (YoY) in October. This was building on a comparatively low rate in October 2015 (when growth was +8.7%), but it still represents the highest YoY growth rate in any month since November 2014, when Black Friday had a huge impact on pre-Christmas shopping patterns.
Interestingly, the Index also recorded its lowest conversion rate – the percentage of website visits that result in sales – since February 2013, at just 4.1%*. This may suggest that, ahead of Black Friday this year, increasing numbers of people are visiting company websites to browse and build wish-lists. Although this may initially seem to contradict the high overall Index growth, it may have been sustained by a significant increase in both the number of site visitors and the amount of impulse purchasing completed at full price whilst browsing.
Across the sectors, sales of home goods performed particularly well and were up a solid +23.9% YoY, and +21.8% on September. This could have been spurred by a deteriorating pound, with people more focused on domestic home improvements rather than spending on holidays abroad – which have become a lot more expensive since the Brexit vote. This renewed focus on higher-ticket items – combined with impulse purchasing at full price – may help to explain an increase in the Index’s average basket value to £90 – the highest since March 2011.
Other sectors which performed impressively included accessories, up +37.7% YoY and gifts up +29.1% YoY. However, in contrast to this, sales in health and beauty tumbled -12.2% YoY, while beauty sales in particular fell -1.9%.
Across mobile channels, tablets made a resurgence, with sales completed on the device up +6.0% YoY and +18.0% MoM*. In the lead-up to Black Friday, it may be the ease of browsing multiple sites and products on the device that has boosted their use over smartphones which offer smaller display screens.
Justin Opie, MD at IMRG, said:
“The Index has performed ahead of expectation so far in 2016 – we recently adjusted our start-of-year forecast from +11% growth to +15% as a consequence – and October’s results continued this trend. On the surface a drop in conversion should logically lead to lower growth, but a 5-year high for basket values and the likelihood of increased site traffic as people start researching in advance of Black Friday seems to have offset any negative impact. In recent years Black Friday has become an incredibly important period for determining a retailer’s success at the peak time of year, so retailers will hope that higher basket values can be sustained over the coming few weeks.”
Bhavesh Unadkat, management consultant in retail customer engagement design at Capgemini, said:
“It’s very reassuring to see the market perform so well. Despite some of the economic uncertainty we’ve experienced since the summer, consumer confidence clearly remains strong. The performance was likely boosted by multi-channel retailers holding discount days which helped drive incremental traffic and sales. The dip in conversion rates suggest shoppers began browsing websites early in preparation for Black Friday, or as they begin to create their Christmas lists. In doing so, they could well have converted on selected items that were on offer. October’s results offer a very positive indication of what retailers can expect from the fast approaching festive period. However, it will be up to retailers to make sure they capitalise on these vitally important trading periods.”
