Maturing online sector faces tough 2018

Maturing online sector faces tough 2018

UK online retail sales were up 12.1% on average YoY in 2017, according to the IMRG Capgemini e-Retail Sales Index. Compared to 2016’s YoY average of 15.9%, and just under two percentage points lower than the Index’s 2017 forecast of 14%, the drop highlights a maturing market. Across the 12 months of 2017, only March and April showed notably stronger YoY growth than the previous year.

The Index performance in 2016 was largely driven by strong sales growth through smartphones, but this slowed in 2017. Growth through tablets has also stalled (up 0.7% in 2017), and a further slow down is forecast for all devices during 2018. According to Bhavesh Unadkat, Principal Consultant in Retail Customer Engagement, Capgemini, 2018 will be “ultra-competitive” with continued uncertainty, and retailers will need to be focused on their plans to both survive and grow. 

A key area will be emerging technology – voice and social commerce, connected devices and AI all drove interest and investment in 2017 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. 

"Many have got it right across certain channels, however not across the whole customer experience across all channels. Finally, there is sometimes so much focus on technology and innovation we can forget retail basics – ensuring the product mix is right, availability is on point, the shop front is one to be proud of, and ensuring the team are well equipped to give customers the best service can be just as important. 2018 will be volatile but very exciting as we see the great retail industry again raise the bar," says Unadkat.

Justin Opie, Managing Director at IMRG, comments: “A decline in the rate of online sales growth in 2017 was forecast, though it turned out to be sharper than expected. The macro economic 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; discounting in the lead-up to Black Friday started deep into October in 2017 and have been widely available ever since. It may be that retailers will now find themselves caught in a cycle of discounting, which also happened in 2011 and 2015 and will probably extend long after the January sales, as the trading climate is tough at the moment."

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