Sainsbury’s experiences biggest online Christmas

Sainsbury’s claims Christmas 2014 was its biggest to date for online groceries

Sainsbury’s claims Christmas 2014 was its biggest to date for online groceries.

In its third-quarter results, the retailer said more than 110,000 online orders were delivered to customers in the days before the holiday – regardless of criticisms that IT problems led to failures in delivering pre-ordered groceries in time for the big day.

Meanwhile, customer transactions online and in store during the week before Christmas hit a record-breaking 29.5 million.

But despite the record high in online and offline shopping, the retailer continued to see a decline in sales, with a 0.4% drop in total sales for its third quarter of 2014, while like-for-like sales in 2014 fell 1.7% compared to 2013.

Chief executive Mike Coupe said the outlook for the remainder of the financial year is set to remain challenging, blaming food price deflation for the poor sales figures.  

A record year for online

Sainsbury’s wasn’t the only retailer to experience an increase in sales from online channels; analysts at IMRG Capgemini calculated that sales in November saw the largest increase in its 14-year benchmarking history.

Earlier this week, John Lewis also announced a significant increase in online shopping over the 2014 Christmas period, with 36% of all sales being conducted through its website.

The department store reported a 19% increase in the use of online channels compared with the previous year, with over half of online orders being collected in-store via the click-and-collect option rather than home delivery.

Total sales during the five weeks to 27 December 2014 rose by 4.8%, with the Black Friday discount weekend in November contributing £777m to the increase.

Meanwhile, sales in shops remained at a similar level to 2013, meaning online channels were largely responsible for boosting sales figures for Christmas 2014. 

Not planning ahead

But despite the expected increase, thanks to the proliferation of mobile devices, some stores failed to plan for capacity, which saw some retailers, including Sainsbury's and Waitrose, come under fire in the days before Christmas

Both retailers experienced IT glitches on their websites which resulted in the cancellation of Christmas deliveries for customers, while earlier in December 2014, Marks & Spencer found its distribution centre couldn’t keep up with the high demand and had to delay online deliveries by up to two weeks. 

Senior research analyst for Europe at IDC Retail Insights, Miya Knights, said the problem stemmed from retailers not being prepared for more people than ever being online.

“It’s a matter of not planning for the capacity, and that’s no excuse. They knew this year was going to be massive and unfortunately they’ve been ill-prepared,” said Knights. 

“Particularly with Black Friday and Cyber Monday, which is something they’ve chosen to adopt and market heavily, not being able to meet that capacity and demand, from a customer perspective, is unacceptable,” she added.

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