March sees electricals reverse five-year online sales slump

All online retail sectors saw year-on-year growth in March, but electricals did particularly well, growing by 21.9 per cent and halting five years of decline.

The latest figures from the IMRG Capgemini e-Retail Sales Index showed that online sales stormed ahead with growth of 18.9 per cent year on year – the best performance since November 2016.

The Easter bank holiday drove a surge of 27 per cent for the final week in March, rounding off a hugely successful first quarter for 2018, where average growth was well above forecasts at 15.4 per cent versus nine per cent.

The ‘Beast from the East’ was another factor that drove people online for their purchases.

Said Andrew Mulcahy, strategy and insight director at IMRG: “It’s possible to read this month’s results as a simple story of online continuing to benefit from the decline of the high street, but it may be that we are seeing an acceleration of this. At the same time, it could just be a blip – Easter falling in March will likely have pushed up online growth, plus the weather has brought heavy snowfall and prolonged rainfall.

“If the strong growth is sustained into April, it would be tempting to conclude that we may have entered a new retail era – where store portfolios are going to be reduced faster under a far more radical programme of store consolidation, with digital transformation going high up board agendas.”

Mr Mulcahy added: “But what does that mean for the high street? Shopping centres have generally performed better than high streets recently, so it’s not that physical retail spaces can’t work. The question is – if retail were to start again entirely from scratch tomorrow, what would a retailer’s physical space look like? Would we actually even create high streets again?”

Bhavesh Unadkat, principal consultant in retail customer engagement at Capgemini, believes it is still important for retailers to maintain some form of physical presence in addition to a digital one. “The trick for retailers,” he said, “is to figure out how the two can successfully work in combination, and what role each must play.

“Regardless of a probable uptick in high-street sales as the months warm up, this isn’t a calculation retailers can afford to push to the back of their minds until autumn. Not only is the British weather far too unreliable for such optimism, but all the signs point to this being part of a much more intrinsic change in consumer behaviour that continues to gather pace. For those retailers who fail to evolve their approach fast enough, the gap in fortunes is only going to widen.”