Online retail sales cool down as sun shines

Online retail sales were up 9% year-on-year in July representing the slowest annual growth since January 2010, according to the latest e-retail Sales Index from trade body IMRG and consulting firm Capgemini.

Sales levels were down 2% on June's figure – the first time July's sales have dropped month-on-month in the index's 13-year history – as the UK experienced a number of weeks of hot weather. The average e-retail basket value was down 15% year-on-year.

So what does this all mean? Can it just be the weather that's to blame?

Well, the hot conditions certainly will have had an impact because surveys published in recent weeks have shown that the UK retail sales on the high street were strong in July, as consumers seemingly preferred to head out to the shops, rather than sit in front of their computer screens at home.

Alex Smith-Bingham, vice president of digital and multichannel services at Capgemini Consulting's Consumer Products & Retail team, said that normal service is expected to be resumed between now and the end of the year.

"The warm weather encouraged shoppers to leave their homes and shop on the high street to enjoy the sunshine," he explained.

"As a result, bricks and mortar retailers saw sales rise as shoppers took advantage of seasonal promotions. Whilst this did have an impact on e-retail, the sector is still performing well, with total online sales for 2013 to-date standing at a solid 15%. I have no doubt online sales will return to high growth as we countdown to Christmas."

The pace of online retail growth is widely viewed to be slowing down at some of the more established multichannel retailers, though, as the market naturally becomes more saturated – and today's results announcement does raise the question about where growth-hungry businesses operating in the sector will switch their attention in the near future.

IMRG's head of e-logistics Andrew Starkey said recently that as the exponential rise in e-tail sales experienced over the last decade does start to slow, there could be a focus on delivery efficiency and quality as retailers look to avoid unnecessary costs in the supply chain. In his big interview with Essential Retail last week, he suggested that logistics will continue to increase in importance as part of retailers' wider strategies.

"Retailers are taking all of this a bit more seriously," he remarked.

UK retailers will also more frequently look abroad to emerging e-tail markets, of course, with huge potential currently existing in Southern and Eastern Europe in countries such as Italy and Russia.

On the technology front, investment in mCommerce will become essential to boosting sales. Indeed, the IMRG-Capgemini index shows that as overall e-tail revenues slowed in July, sales made via mobile devices did actually accelerate 129% year on year.

Reflecting on these figures, Oliver Ripley, mobile product manager at eCommerce services provider eCommera, commented: "One can surmise from this that sunny skies mean UK shoppers shift their shopping habits towards bricks and mortar shops and away from the retailer websites - this is understandable. 

"What is not so understandable is that mCommerce had a very successful July. UK mCommerce was 129% up on the previous year and the average conversion rate was the highest it has been for five months at 2.5%."

The IMRG-Capgemini data found that weak e-tail sales growth was recorded across a number of sectors, with electricals (+2%), health and beauty (+3%) and travel (+3%) only slightly up on the same month last year.

Home and garden (+37%) and beers, wines and spirits (+23%), meanwhile, were particularly strong performing categories in July.

As we approach the final third of 2013 there are a number of issues coming together that could further prove the significance of mobile as part of the wider buying process.

Ray Buckler from consultancy firm Retail DNA said that the coming months will see the roll-out of faster broadband and the conversion to mobile of the next batch of confident technology users, as well as the next wave of smartphone and tablet devices hitting the market. All of these matters – combined with the imminent busy Christmas shopping period – could highlight how the next generation of digital retail sales will manifest itself.

He said: "2014 will prove to be a watershed year for many retailers, who must now get up to speed very quickly or be left behind in the wake of savvy consumers who are now choosing their favourite retailers and brands that understand how they want to shop."

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