Online Retail Sales Slows Due To Maturing Market With Tough 2018 Ahead!

According to latest IMRG Capgemini e-Retail Sales Index, a sharp drop in 2017’s figures to 2016’s 15.9% average growth.

In 2018, a forecast to slow down online retail sales again to a growth of 9% - the first time it has fallen into a single digit territory.

IMRG and Capgemini said the fall in annual growth is one of multiple indicators of a maturing online retail market. March and April months show notably stronger year-on-year growth when compared to 2016.

In addition, sales growth through smartphones averaged 77% every month from July to December 2016, but in the same period in 2017 it fell to 50% while the growth through tablets has only grew a meager 0.7%.

In 2018, it is forecast to slow down further in all the devices.

IMRG and Capgemini say the sales rates were consistent with three-year-bounce pattern of growth identified in the index. Peaks starting in 2010 and repeating in 2013 and 2016, so after 2018’s predicted slowdown, 2019 could be another peak year.

“2018 will be ultra-competitive with continued uncertainty, retailers will therefore need to be focused on their plans to both survive and grow,” Capgemini principal consultant Bhavesh Unadkat said.

“One opportunity for growth and differentiation will come from emerging technology as we saw as a focus in 2017 – voice and social commerce, connected devices and artificial intelligence all drove interest and investment 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.”

IMRG managing director Juston Opie said “macro economic factors such as rising inflation, low wage growth, rise in the interest rate are likely to have had an influence on 2017’s figures”.

“The first half of 2018 may be challenging, too,” he said.

“Discounting lead-up to Black Friday have started deep in the month of October in 2017 and have been available widely 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”.

“That said, 2018 does look set to be a transformational year for retail – with an increasing use of AI services anticipated plus the rise of ‘browserless commerce’.”

Meanwhile, December online retail sales increased 9% year-on-year, which represented 2017’s lowest growth and reflected the changing shape of Christmas shopping as sales are pulled forward into October and November by Black Friday.