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Jan 23, 2018
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UK e-sales rise is slower than expected, smartphone web browsing drives growth

Published
Jan 23, 2018

UK online retail showed signs of a maturing marketing last year and it has a tough 2018 ahead of it. That’s the conclusion of the latest IMRG Capgemini report into the sector. 


UK consumers are increasingly browsing and shopping using their smartphones



It said that UK e-sales rose 12.1% last year. That was lower than the expected 14% and the forecast for 2018 is only 9%, the first time it’s ever been in single-digits.

And this year’s expected low e-tail growth began in December. We may have heard that December shopping was largely about a switch to online, but year-on-year growth was only 9.1%, the lowest of any month in 2017. That was partly due to the ongoing impact of Black Friday that shifted sales into November.

The IMRG Capgemini e-Retail Sales Index has been tracking sales for quite a few years but has rarely offered up such a bleak outlook. In 2016, growth had been 15.9% and while the Brexit vote had shaken consumer confidence, that original 2017 14% forecast tells us that what actually transpired last year was quite a shock. In fact, across the year, only March and April saw stronger growth than the previous year.

So was there any good news? Well, one area is still growing fast and that’s sales through smartphones. They were up sharply, but as the sector matures, even here the growth was a bit more muted. In the second half of 2016, smartphone sales growth had been an average of 77%, while in 2017, that figure dropped to 50%.

Growth using tablet computers also stalled with a barely noticeable rise of just 0.7% last year and the e-Retail Sales Index expects further slow growth for all devices this year.

THREE-YEAR BOUNCE?

Interestingly, IMRG said that this is actually consistent with a three-year-bounce pattern of growth identified in the Index, with peaks starting in 2010 and repeating in 2013 and 2016. 

In 2010 the bounce was due to faster web speeds and better performing tech generally. In 2013 it was driven by widespread tablet adoption, while in 2016, smartphones were the reason.

Should we expect a similar bounce in 2019? IMRG and Capgemini aren’t sure but said it would need “a new stimulus to be entering or proliferating the market during 2019” for it to happen.

Back with the current year, Bhavesh Unadkat, principal consultant in retail customer engagement at Capgemini, said: “2018 will be ultra competitive with continued uncertainty. One opportunity for growth and differentiation will come from emerging  technology as we saw in 2017 – voice and social commerce, connected devices and AI all drove interest and investment and will continue to do so. The big challenge will remain as how to drive value and industrialising this capability.  

“A second opportunity will be deepening relationships with customers and taking an insight driven approach to omnichannel retail – one which arguably remains a gap for many retailers across channels.”

Justin Opie, managing director at IMRG, added: “A decline in the rate of online sales growth in 2017 was forecast, though it turned out to be sharper than expected. The macroeconomic factors – rising inflation, low wage growth, rise in the interest rate etc – are likely to have been influential and the first half of 2018 may be challenging too.

“That said, 2018 does look set to be a transformational year for retail – with an increasing use of AI services anticipated plus the rise of ‘browserless commerce’ (through devices such as voice assistants). It may be that we see shopper behaviour shift significantly over the coming period.”

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