Price-slashing leads to biggest online retail growth for two years

The CMJ was praised for having funds in place to buffer supplier members after the unexpected closure of Leslie Cass this month. (Getty)

The retail industry has produced its highest online sales growth for almost two years – but experts have warned that the increase has been led by heavy discounting.

Internet sales growth reached 19% year-on-year in July, according to the IMRG Capgemini eRetail Sales Index. It represents a 20-month high for the Index and continues a stronger-than-expected 2016 for online retail.

High discounting by retailers across the board throughout July may have contributed to the strong performance of the Index, it said. It also noted that the discounting may have been influenced in part by a need to compete with Amazon Prime Day (12 July), with Amazon announcing that customer orders surpassed Prime Day 2015 by more than 60% worldwide.

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The Index growth was also, in part, fuelled by a resurgence in sales growth for multichannel retailers, who recorded a growth rate in online sales of 19%, a 13-month high. This was supported by continued strong growth for online-only retailers where sales grew 18% year-on-year.

This surprise revival for multichannel retailers follows a sustained period of lower growth compared with their online-only counterparts.

Indeed, IMRG and Capgemini reported last month that the gap between the two groups had reached a record-high in June, when growth for the online-only retailers was a full 23 percentage-points ahead of the rate for the multichannel retailers, compared with June 2015.

Bhavesh Unadkat, management consultant in retail customer engagement design at Capgemini, said: “Impressive sales from the multichannel retailers saw them drive growth and undoubtedly helped the month’s figures. Indeed, many of these retailers had reactive plans in place to match the discounts offered by Amazon Prime Day, which goes some way to explaining the drop in basket value. These low prices spurred high volume sales which ensured double digit growth.”

Unadkat added that the figures were also bolstered by an encouraging economic position, which increased consumer confidence, alongside some great weather which led people to shop.

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