UK online retail sales up 14% to break £100bn barrier for first time in 2014

Online sales totaled £104bn in 2014, up 14 per cent from the previous year, marking the first time consumers have spent more than £100bn online, according to IMRG Capgemini’s e-Retail Sales Index.

It has been predicted this will grow by an estimated 12 per cent again in 2015, with consumers set to spend nearly £120bn.

Sales via smartphones and tablet devices recorded a 55 per cent growth on the same period in 2013. Over a third (37 per cent) of online sales were made on a mobile device over the year, equating to a £8bn compared to £5.1bn the previous year.This represents an estimated 8.9 per cent of total retail sales.

However, December proved challenging for the industry following Black Friday the month before.

There was a higher than anticipated spike on Black Friday which accounted for 17 per cent (£3.7bn) of total sales for the Christmas period. This was the greatest concentration of sales in one period but ultimately had a knock on effect and led the December index falling four per cent.

Discussing the figures at an event on London today (14 January), IMRG’s Tina Spooner, chief information officer, said the figures signalled that the American-born retail event doesn’t bring in additional sales for Christmas, but instead “compresses” the whole period into four days.

For the 70 per cent of UK retailers participating in the four-day event – culminating in Cyber Monday – it led to a 27 per cent in delivery volumes compared to the previous month.

M&S and Argos struggled to cope with the pressure, while delivery company Yodel was also forced to delay its collection of parcels to catch up with a backlog of orders.

“The challenge going forward is that Black Friday has been cemented into shoppers’ consciousness and they will expect the same kind of focused discounting next year. As an industry, we will need to work together to understand how this extreme activity spike can best be managed in the interests of both shoppers and retailers,” Spooner added.

Craig Wheeler, e-commerce and retail operations director at FeelUnique.com, revealed its digital sales tripled and it plans to at least double that figure for Black Friday 2015.

But he said managing expectations of delivery is key.“We have to set the expectations of when the delivery will happen. If someone knows an order is going to take a week to get to them, they’re happy with that if they know. What happened last year, across the industry, is they didn’t know carries would break. There’s a lot more learning to go into it,” he said.

While profitable for FeelUnique.com, IMRG suggested it may not have been the story for many smaller retailers who would have considerably eaten into margins in order to show consumers they were participating.

Adgild Hop, principal, head of retail consulting at Capgemini, warned of chasing sales volume at the expense of customer intimacy and profitability.

“Black Friday was unquestionably a success for the value-seeking consumer, but for retailers themselves, its success is not quite as clear. As the Index reveals, spending was brought forward a month earlier, at much lower margins for retailers, as a result of the discounts available to customers in November.”

Despite the many logistical and profitability issues that must ne addressed, Wheeler ultimately said: “Retailers love events. We love Mother’s Day, Valentine’s Day, Easter. [We] love something to hang a promotion on. And now we’ve got another one.”