Direct sellers see the silver lining, but forecast remains cloudy

By Miri Thomas | Publication date: 08/08/2012 | Category: News

 

The past three months have seen some of the wettest weather on record, but far from being bad for business, some direct sellers actually saw a sales uplift thanks to the torrential downpours. According to the latest estimates, £34.9 billion was spent online in the first six months of the year, with £6 billion in June alone—the wettest June since 1910.

Figures from the IMRG Capgemini e-Retail Sales Index show that Brits spent £3.9 billion more in the first half of 2012 compared to the same period last year. The reason? IMRG believes the weather had a big part to play, especially for sales of foreign holidays and home entertainment products. The gift sector also reported a 43 percent increase from June last year, IMRG notes.
But it wasn’t a sunny picture from all sectors: sellers of garden furniture have had to slash prices, while the wet weather dampened demand for summer clothing. 

A perfect storm

Among the direct merchants Direct Commerce spoke to, there were several that were thriving despite, or because of, the rain. For example, Lovehoney, an online seller of sex toys, witnessed particularly strong trading. “We’ve enjoyed a perfect storm this quarter,” says cofounder Richard Longhurst. In May, Channel 4 broadcast an hour-long documentary about Lovehoney that was watched by 1.2 million people, “massively raising awareness of our brand”. Quick on its heels was the rising popularity of erotic novel Fifty Shades of Grey, which Longhurst says encouraged people to investigate sex toys and bondage equipment “in huge numbers”. What’s more, says Longhurst, the rain has made more people stay inside and shop online—giving them “ample time and opportunity to enjoy time with their partners and our products”. Although a fairly “rough and ready” calculation, Lovehoney estimates that sales are boosted by 10 percent whenever there’s a prolonged period of bad weather.

In a completely different product sector, another online retailer/cataloguer benefitting from consumers staying indoors is RUCraft, which sells sewing fabrics, knitting yarns, cross stitch kits and craft books. Head of online and consumer marketing Brian O’Donnell told Direct Commerce that the second and third quarters of the year are the company’s weakest, due to the sunny weather driving people outdoors, but in 2012, “we’re actually 95 percent up on last year as people went online in search of inspiration”. Sales of knitting yarns and fabrics for quilting and sewing have also exceeded expectations, he says, as crafting continues its resurgence in the UK  as consumers further adopt the “make do and mend” mentality.

The wet weather also doesn’t seem to have hurt Asos, which delivered an encouraging 8 percent growth in UK retail sales, to £48.1 million, in the three months ended 30th June. At N Brown, which operates Jacamo, Simply Be, House of Bath and Figleaves, sales in the 17 weeks to 30th June increased by 2.5 percent, though the company notes “significant variation in performance by product category”. While the bad weather depressed sales of womenswear, its menswear, footwear, lingerie and home and leisure products all showed growth.

Both the positive and negative effects of bad weather were also experienced at Winfields, a retailer/online seller of outdoor equipment. According to Christina Manning, Winfields’ online marketing team leader, the business had seen a “dramatic increase in sales compared to this time last year” for its waterproof products. But on the other hand, there was less demand for tents during the past few months. Manning believes the uplift was due to customers being more confident in buying autumn/winter clothing in summer as “with UK weather they are going to get good use of the product”. Packaways and children’s waterproofs have been especially popular, she adds.

Winfields and N Brown aren’t the only ones to see growth in one area, but  declines in another. Ian Cheshire, group chief executive at Kingfisher, the parent company of B&Q, said in a statement that “the unprecedented wet weather” impacted store footfall and consumer demand for outdoor and seasonal products. But through additional promotional activity encouraging consumers to tackle DIY jobs indoors, the company partially offset the weather-related weakness.
Although these comments are in some ways encouraging, showing that quick-thinking merchants can see a silver lining in every cloud, let’s not get ahead of ourselves. According to the KPMG/Ipsos Retail Think Tank, the health of the retail sector is “still in the doldrums”. Further, figures released by the Office for National Statistics show that online sales in June were just 0.3 percent ahead of May and retail in general was ahead by a scant 0.9 percent, indicating that the diamond jubilee had not been as effective at bolstering retailers’ coffers as hoped.

According to Dr Tim Denison, head of retail intelligence at Ipsos Retail Performance, “the economy remains disappointing and with global uncertainties rising again, consumer confidence remains very low.” Although he notes that recent big events such as the Olympics may help to energise shoppers, it will take “genuine economic growth to shift sentiment and belief in personal finance improvements. Unfortunately, there is little sign of this yet,” he concludes soberly.