Strongest May growth for online retail since 2010

UK online retail sales rose 19.4% year-on-year in May, according to the latest IMRG – Capgemini e-Retail Sales Index.

The Index tracks online sales, defined as ‘transactions completed fully, including payment, via interactive channels from any location, including in-store’.

In a month that saw scorching temperatures, a royal wedding, the FA Cup Final, and two bank holidays, this was the highest year-on-year increase for May since 2010 – and the strongest month overall since November 2016.

Footwear and Garden were the standout sectors, recording year-on-year growth of 54.4% and 40.2% respectively. And during the record temperatures of the first bank holiday week, Garden growth reached 74%. Meanwhile, with the summer holiday season fast approaching, Health & Beauty increased by 23%.

IMRG strategy and insight director Andy Mulcahy said: “Growth for the online retail market has been exceptionally strong so far in 2018, with May’s result being the highest for that month in eight years.

“Things have been tough on the high street recently. Although a better performance was reported in May, this may have been a blip prompted by the mood of national celebration last month. And it’s telling that when physical retail does well, online does even better – recording its highest growth in 18 months in May.

He continued: “It’s becoming increasingly clear that shoppers are favouring online channels over physical ones to a greater degree than they used to, which is accelerating the pace of change for multichannel retailers.

“There is nothing new in online taking a greater share of sales. The question is what happens to physical retail? Traditional shops won’t vanish entirely – there will always be some level of demand for them – but how high streets and other retail spaces evolve more generally in response to lower shopper interest is a matter for some debate.

“Many speak about focusing on in-store ‘experience’ but in many cases, the solutions don’t seem to be very different from what was there before.

“It seems likely that retail is in for a rocky period of readjustment, which might take several years before blueprints for a successful physical retail space become more apparent.”

IMRG (Interactive Media in Retail Group) is an online retail association that tracks online sales. Its membership comprises businesses of all sizes from multichannel and pureplay retailers to multinationals, SMEs and micro retailers, plus industry solution providers.

Capgemini specialises in consulting, technology services and digital transformation.

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