Online retailers in the United Kingdom looking for insight about what 2017 will bring might not get a clear reading from January e-commerce data.
Shoppers in the U.K. spent on average 85 pounds ($106.05 USD) when they shopped online in January, up 7.6% from 79 pounds ($98.57) a year ago and the highest average value for January in seven years, according to the IMRG Capgemini e-Retail Sales Index, which tracks online sales data from more than 100 e-retailers. The average basket value increased in clothing, accessories and gifts sectors but decreased in electronics, data from e-retail association Interactive Media in Retail Group shows.
Online sales grew 12% in January compared with a year ago, but the growth rate has slowed as January 2016 posted year-over-year online sales growth of 15%, according to IMRG.
“January’s figures reveal a steady start to the year, but 2017 is not without its challenges for online retailers,” IMRG managing director Justin Opie says. “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.” In June, U.K. voters approved a measure, known as the Brexit vote, to have their country leave the European Union.
In a separate study, data from the British Retail Consortium-KPMG Retail Sales Monitor also show January online sales grew more slowly than they did a year ago.
BRC-KPMG’s data shows online sales growth of 8.0% compared with 14.9% year-over-year growth in January 2016. When examining the three-month period of November through January, U.K. shoppers are increasingly shopping online rather than in stores, with online sales up 8.6% year over year during that span and store sales down 2.4%. The BRC-KPMG data defines online sales as nonfood transactions those made via the internet, mail order and phone.
The Office for National Statistics also released its January data and says online sales in January (excluding fuel) increased 10.1% year over year and accounted for approximately 14.6% of all retail spending, up from 13.6% in the year-ago period. Total retail sales, however, grew just 1.5% compared with January 2016, the lowest growth since November 2013, ONS says. The statistics agency measures output from the retail industry in Great Britain by surveying 5,000 businesses, all with more than 100 employees via an online questionnaire every month.
“Online retail channels will continue to grow in popularity, and with increased pricing pinching the consumer purse, retailers will need to balance price, personalization and customer experience seamlessly in order to grab the attention of their customers,” writes Paul Martin, U.K. head of retail for KPMG.
“Retailers needn’t view this growth in the popularity of online as a threat to their physical presence however, but should view it all as one intrinsically linked experience,” says Heather Barson, director for Retail and Hospitality, U.K. and Ireland at information and communications technology firm Fujitsu. “Retailers need to adopt the mindset that online and in-store services are one and the same. Retailers should view the store as an extension of their brand, and utilize the space wisely so as to create an experience that customers buy into and are loyal to.”