Online retail shows signs of maturing with tough 2018 ahead, says IMRG

Despite encouraging sales growth, the association predicts this year will be “ultra competitive”

The rate of retail sales growth is pointing to a ‘maturing market’, figures from the IMRG Capgemini e-Retail Sales Index suggest.

UK online retail sales were up 12.1% on average year-on-year (YoY) in 2017, which was lower than the IMRG’s forecast of 14%. This figures also falls short of 2016’s YoY average of 15.9%.

In 2017, only March and April showed notably stronger YoY growth than the previous year.

 This is consistent with a ‘three-year-bounce’ pattern of growth identified by the IMRG, which showed peaks starting in 2010 and repeating in 2013 and 2016. The association suggests that if 2018 follows this pattern, a new stimulus should be entering or proliferating the market during 2019.

The Index performance in 2016 was largely driven by strong sales growth through smartphones, but this slowed in 2017.

Sales growth through smartphones averaged 77% each month from July to December 2016. In the same period in 2017 it fell to 50%.

Growth through tablets has also stalled (up 0.7% in 2017), and 2018 growth is expected to slow down further for all devices.

Justin Opie, managing director, IMRG said: “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.

“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’ (through devices such as voice assistants).

“It may be that we see shopper behaviour shift significantly over the coming period.”

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