Online retail sales up 15% but smartphone growth slows

Online retail

Online retail sales in the UK were up 15% year on year in February with average basket values hitting a seven-year high, however growth in smartphone sales has slowed significantly.

According to the latest figures from IMRG Capgemini overall online retail sales were up 15% in February compared to a growth of 16% in February 2016, however growth through the smartphone channel has roughly halved. In February 2016 smartphone sales growth was +96% year on year, but in February 2017 it was just +57%.

Tablet growth remains low at just 3.5% with smartphones taking a far greater share of the overall mobile sales market. However IMRG suggests that the drop-off in growth from smartphones (which is specific to online retailers only, multichannel retailers witnessed a slight increase in smartphone sales) will affect online sales growth overall.

“It’s encouraging to see the second month of seven-year highs for average basket values in a row. When it comes to smartphones though, the slowdown in sales growth does appear to be fairly dramatic. That said, rates of smartphone growth over the past two years have been very high, and that couldn’t continue indefinitely. The slowdown is specific to the online-only retailers — multichannel retailers are performing better than they have been through mobile, with greatly increased average basket values,” said IMRG  managing director Justin Opie. Overall basket value was up by £20 year on year.

Opie added that the picture remained positive for online retail growth but warned the was “a cloud or two on the horizon”. “Smartphones have been the driver of mobile growth, and the slowdown could come to impact growth. And, of course, the ever-present uncertainty of Brexit looms large in 2017, with inflation rising and Article 50 being triggered imminently,” Opie said.

Capgemini Principal Consultant in Retail Customer Engagement Design Bhavesh Unadkat said the slight dip in overall growth could be a sign of a dent in consumer confidence triggered by higher prices. “It is perhaps no coincidence that the Index’s growth rate slumped slightly in the face of a higher inflation rate which was over 1.5% in January 2017 compared with 0.3% in January 2016,” he said.

“Although there are some warning signs for the retail industry — with sales made on smartphones falling month-on-month, for example — these are trends we’ve seen echoed in previous years. Traditionally January and February are slower months for purchases made on smartphones, and e-retail sales in general,” Unadkhat added.