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Transactis Home Shopping Index shows ‘etailing’ continues to grow despite economic uncertainty

Filed under: All Articles > Industry News
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By: NMK Created on: February 14th, 2013
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Database marketing firm’s analysis of millions of transactions reveals that online has solidified its place in the retail mix as mobile device use spreads. By Richard Higginbotham.

By Richard Higginbotham

The latest Transactis Home Shopping Index shows that in the age of digital mobility, the web has become even more crucial as a means for home shopping retailers to reach the multichannel and multi-device consumer. The Index, which uses consumer insight firm Transactis’ proprietary database TransAction – built from the transactions of 39 million consumers across 205 home shopping brands – reveals that online purchasing continues to rise despite a tough economic environment for retailers, but that year-on-year growth in buying over the web slowed in the first half of 2012 after picking up in 2011.

Online spend soared by an encouraging 17% in 2011 – compared to 10% the year before – as UK consumers were cheered by brighter economic news and a slight increase in Gross Domestic Product (GDP). However, consumers appear to have returned to more cautious ways in 2012 as the UK headed back into recession. Figures for the first half of 2012 show the rate of growth in web spend fell to 11% during the first six months of the year.

Nonetheless, the Index, which encompasses purchases of fashion items, household goods, children’s merchandise, gadgets, home furnishings and other products through catalogues and websites, demonstrates that online shopping has emerged as the primary driver in the retail marketplace despite the rate of growth slipping slightly in recent years. Overall, the Home Shopping Index reveals that online spend has leapt by 243% between the base year of 2006 and 2011, whereas the total increase in combined online and offline home shopping spend in the six years covered by the Index is only 29%. The continuing, albeit slower, web spend growth in 2012 came at a time when total home shopping spend actually dropped by just under 1%.

2011 marked a watershed in home retail: it is the first year covered by the Index in which average annual web spend per person outstripped the corresponding figure for all home shopping media – indicating that online has indeed surpassed traditional channels such as mail order, as more people made the majority of their purchases and spent more of their money overall online. The figures for the first half of 2012 show this trend continuing.

Other key findings in the analysis of the Transactis Home Shopping Index include:

    • In total, web spend accounted for 62% of British consumers’ total home shopping spend in 2011 – a huge increase from 23% in 2006

    • The enormous growth in online shopping between 2006 and 2011 was strongly led by the digitally-savvy 18 to 24 year-old demographic, who made 80% of their home shopping purchases via the web in 2011 and whose web spend jumped by 1,399% during that period

    • Consumers aged over 75 are, unsurprisingly, the most reluctant to make the move from mail order to online shopping, and in 2011 they made just 8% of their home shopping purchases via the web, while the figure for 65 to 75 age group was 20%

    • The rate of growth in web spend is slowing, even for 18-24 year-olds, suggesting that the channel has reached maturity and is approaching saturation as the vast majority of consumers aged under 55 now make more their home shopping purchases online than via other channels

    Michael Green, Director of Insight at Transactis, notes: “The Transactis Home Shopping Index demonstrates that the internet has firmly taken its place as the cornerstone of the modern home retail mix, but digital continues to grow and evolve as new technologies come into play. Even in the face of tough economic times, ecommerce has continued to capture new spend and play a bigger role in people’s everyday lives. As the range, capabilities and adoption of digital devices continue to increase, retailers will find that managing relationships with home shopping customers becomes a more challenging task.”

    He adds: “The proliferation of tablets, smartphones and other portable devices has meant that the patterns of individual consumers are far from set. Not only are the ways in which consumers interact with retailers changing, but so is the ability of companies to follow and make sense of customer behaviour across multiple touch points. In what has become a fast-changing and complex shopping environment tracking, understanding and interpreting individual behaviour in order to create actionable strategies to engender loyalty and repeat purchase is increasingly important. The ability to take many sources of structured and unstructured data and form a single customer view is essential as marketers seek to effectively target and tailor their offers and communications.”

    Transactis Home Shopping Index 2012 – chart and tables

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    About the author and Transactis

    Richard Higginbotham is Head of Marketing at Transactis, a customer insight, data management and anti-fraud services business, providing marketing, fraud prevention and customer management solutions to some of the most successful organisations in the UK. The company is one of the UK’s leading specialists in combining data from multiple sources to provide a detailed and actionable understanding of individual consumer behaviour, risk and opportunity. Alongside its strength in retail, drawing on the unique transactional data pooled from more than 200 of the UK’s leading home shopping brands, Transactis manages solutions for Nationwide Building Society, HM Revenue and Customs, Shop Direct Group and Betfair, amongst other clients.

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