Online retail sales up 15%, but growth through smartphones halves

UK online retail sales were up 15% year-on-year in February, according to the latest figures from the IMRG Capgemini e-Retail Sales Index, building on solid growth in February 2016 (+16%).

For the second month running, the average basket value was at a seven-year high for that month.

While on the surface this represents a strong month for online retail sales growth, there were some signs that sustaining this rate of growth throughout the whole year may be a challenge.

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One of the main drivers for online retail in recent years has been the growth of sales made through smartphone devices.

For the past three months, however, the rate of growth through these devices has roughly halved year-on-year — in February 2016 it was +96% YoY, but in February 2017 it was just +57%.

Tablet growth remains low (+3.5%) and, with smartphones taking a greater share of sales through mobile devices, a sustained slowdown in sales growth through this channel will come to impact upon growth rates for online retail overall.

However, this slowdown in growth through mobile devices (smartphones and tablets) is specific to online-only retailers.

For multichannel retailers, which have both an online and in-store offering, growth in sales made on mobile devices was up slightly year-on-year, while the average basket value of online retail sales in general rose by nearly £20.

Bhavesh Unadkat, principal consultant in Retail Customer Engagement Design at Capgemini said: “It was positive to see a solid growth rate for online retail in February 2017, building on a strong February 2016 growth rate of 16%. However, there was a slight dip in the growth rate this month, and that could be attributed to a knock in consumer confidence triggered by higher prices. It is perhaps no coincidence that the Index’s growth rate slumped slightly in the face of a higher inflation rate which was over 1.5% in January 2017 compared with 0.3% in January 2016.

“Although there are some warning signs for the retail industry — with sales made on smartphones falling month-on-month, for example — these are trends we’ve seen echoed in previous years. Traditionally January and February are slower months for purchases made on smartphones, and e-retail sales in general.”

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