Posted on Monday, 2nd January 2012 by Jesse Walker
The clear overall trend of the year has been the falling away of retail sales and the resilience of ecommerce. In what is likely to me my last blog post of the year I thought that I would do a bit of a statistical round up and make some predictions for the New Year.
The first thing to say is that having waited for most of the year for ecommerce to account for more than 10% of retail sales – boof – in one month the figure blasts through the 10% barriers and reaches a dizzy 12.2%. Loyal readers will know that I do have my doubts about the accuracy of the office of National Statistics Retail Sales figures which are subject to a lot of revision, but this is the first time that they have officially broken the magic 10% figure. We can truthfully say that one pound in every eight is now an online pound!
Digging a little further into the figures and one can see that whilst this is driven in part by an increase in online sales (growth according to the IMRG is still in double digits at 11% year on year), it is also a factor of the continuing bloodbath on the High Street; a bloodbath which, with all due respect to Mary Portas, is not going to be fixed by some tweaking with planning law. There’s a mega trend going on here and it’s running away from the city centre as a destination for retail.
So that’s the story of 2011: a deteriorating retail climate and ecommerce bucking the trend, still posting double digit increases. Will ecommerce to continue power ahead in New Year? Well, you pays your money and you takes your choice, depending on the view that you take of a couple of reports from our friends at Eurostat.
The explosive growth in ecommerce over the last decade has been driven by two fundamental factors. First the fact that more and more people were coming online. The number of potential online consumers has been increasing. It’s obvious that with more people having the capability to be able to make purchases through the channel, the channel will grow. And not only do consumers need to be online they also need to have the confidence to make payments on the internet as well.
Well it looks like this trend – which is a one off – may have come to an end. According to Eurostat (pdf), in the UK 89% of all UK citizens are now online (the highest, by the way, is Sweden with 95%) and of the 89% of the UK that’s on line fully 82% have actually bought something (the highest percentage of any country in the EU). So there can only be a little more distance to run on that particular demographic dividend. So you could argue that ecommerce growth will continue to moderate as fewer new consumers come onto the channel than in previous years.
If consumer demand is one side of the equation then the second fundamental reason driving ecommerce growth is producer supply. The statistic (pdf) that I found frankly astonishing was just how far this trend has to run. Guess, just guess what percentage of UK businesses have a website with ecommerce? 79% of businesses have a website. That figure might not surprise you but it’s far from the highest in the EU. Our Finnish business colleagues have the highest percentage of businesses with a website at 93%. But that wasn’t what really surprised me, the shocking statistic is when you ask the supplementary question about how many businesses have an ecommerce facility and that number is lower, much lower. A mere 22%. Or, put another way, nearly four businesses in five can’t sell anything online. Over 2012 this is bound to change and with increasing supply, overall sales could still increase.
So here’s my predictions for 2012: Overall retail sales growth 0%; ecommerce growth 7.5%.
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