The internet properties of the UK’s top 100 high street retailers received 19.3% more visits during July than the 100 largest online-only retailers, says a new Hitwise report. And it’s the fashion sector that’s fuelling the high street’s growth online…
The speed with which the high street is catching up with and overtaking pure play internet specialists is gathering pace. In July, the number of visits to the websites of the one hundred largest online high street retailers was 19.3% higher than the number of visits to the one hundred largest pure play retailers, says a new Hitwise report ‘Can retailers have a happy Christmas during the credit crunch?’
“High street retailers overtook their online only counterparts for the first time during December 2006, but quickly fell behind again for most of 2007,” explained Robin Goad, Hitwise UK’s research director. “However, when the high street overtook again last Christmas, the gap was even greater than before and during 2008 the online-only retailers only managed to edge ahead during February.”
“Given the 2.6% year-on-year decline in actual physical visits to retailers reported by Experian Footfall for July, it looks like high street retailers will be more reliant than ever on their online operations this Christmas,” Goad noted.
Online fashion retailing is now particularly dominated by major high street brands, which accounted for seven of the top ten websites in the category during June, says the report. “The growth of the online fashion industry has been one of the main contributors to the increasing market share of high street retailers online,” says Robin Goad.
“However, there are exceptions to the rule. ASOS was the second most visited website in our ‘Shopping and Classifieds — Apparel and Accessories’ category in July 2008. UK Internet traffic to online-only fashion retailers has more than doubled over the last 12 months.”
In addition to major high street brands such as Next, Top Shop and River Island, the top 10 online fashion retailers in June also included two other remote shopping specialists, M and M Direct and Boden.
Some 62% of shoppers believe shopping online will save them money during the credit crunch according to a poll conducted by discount etailer M&M Direct.
Some 61% of the 1,000 people polled by M&M Direct and Voxpopuk.com, said that they would now be actively looking for bargains while 56% said they would save money by not spending so much on luxury items.
45% of respondents said that bargains were easier to come by online.
When asked if the credit crunch would affect their broader spending habits, 48% of respondents said no, while 54% said that it would not affect their decision to purchase cars, holidays or other large expensive items.
M&M Direct chief executive Steve Robinson said: “The survey shows that the UK consumer is in the process of becoming savvier when it comes to spending money. They want to continue to shop for what they want, but realise they can find bargains online and cut back in key areas to help combat the effects of the credit crunch.”
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UK shoppers spent over £26.5 billion online in the first six months of this year despite the credit crunch, up 38% on the first half of 2007.
According to figures from the IMRG Capgemini e-Retail Sales Index, 17p in every pound was spent online during the first half of the year. Clothing is faring well out of the reported online boom, with £1.76 bn spent on clothes online by UK shoppers in the first half 2008.
James Roper, chief executive and founder of IMRG, said that online shopping growth continues to out-perform the high street and predicted that 30% to 50% of all retail will be online in the next five years.
He said: “As tight budgets and poor weather keep people at home where they can shop online for bargains.
“Clothing and footwear sales were the biggest losers in physical stores in June, with sales either flat or lower than last year despite heavy and widespread discounting.
“However, online they were big winners. Internet clothing sales were up 32%, while lingerie sales rose by 37% and footwear 38%.”
Shoppers spent a record amount on clothes in March, a month-on-month growth of 21.8%, and 31.2% more than March last year.
Thirty to fifty percent of all retail sales could be online within five years, say researchers
Online reaches 17% of retail sales, nears tipping point Thirty to fifty percent of all retail sales could be online within five years, say researchers. UK shoppers spent £26.5billion online in the first six months of 2008, up 38% on the £19.2billion recorded for the same period last year, according to the latest IMRG Capgemini e-Retail Sales Index. That means online sales are now accounting for 17p in every pound spent, equivalent to half of all supermarket sales.
The researchers are now predicting that between 30% and 50% of retail sales will be online in five years. “This is because, as online reaches 20% of all retail sales, retailers experience a tipping point which forces them to seriously re-think the future viability of their business model,” explained Mike Petevinos, head of consulting for retail at Capgemini UK. “We have seen this happen for books, music/DVDs and electricals and as the industry as a whole reaches this tipping point in 2008, more categories are sure to follow.” Sales growth did begin to slow in June, however, with the normal dip in growth experienced in the month “significantly more pronounced than 2007.” That said, Capgemini and IMRG expect rising fuel costs, falling disposable income and smarter consumer shopping habits to drive strong online sales growth throughout the rest of 2008. “Whilst online retail is not immune to the credit crunch, it is showing greater resilience than the high street,” Petevinos explained. “The online channel continues to grow its share of retail spend thanks to the traditional drivers of convenience and choice but these drivers appear to be magnified by the current economic environment.
Convenience has a sharper edge in a world of soaring fuel prices and the ability to research and make more informed choices in a time of heightened price sensitivity is a key advantage of the online channel.” The most pronounced sales increases during the first half of this year have come from both the top end and the bottom end of the market which, say the authors, shows that consumers are becoming smarter shoppers, buying everyday items at discount retailers whilst adding a touch of luxury with select items from high-end retail outlets. This is further backed up, they say, by recent research which found that UK internet visits since June 2007 to mid-market online retailers have fallen by 6%, while visits to lower-end retailers, such as Primark, have increased by 12% and visits to high-end retailers, including Harrods, increased by 14% over the last twelve months.
“Clothing and footwear sales were the biggest losers in physical stores in June, with sales either flat or lower than last year despite heavy and widespread discounting,” explained James Roper, IMRG’s chief executive. “Online, however, they were big winners; internet clothing sales were up 32%, while lingerie sales rose by 37% and footwear 38%.”
Online retailing is continuing to boom in the UK despite a gloomy economy outlook, according to new research. The consumer survey of 4,000 shoppers, conducted by retail analysts Verdict Research, indicted that the amount of money spent by consumers shopping online increased by 35% to £14.7bn last year.
The growth rate was the fastest in six years, and represented about 10 times that of the UK’s retail market as whole. The top answer for opting for the internet over the high street was ‘making better use of leisure time’. The growth in internet access and users making more regular and expensive purchases online meant the growth would continue, Verdict’s report suggested. It forecast that online retail sales would reach £44.9bn by 2012, about 13.8% of total spending. But while some of this was “cannibalisation” - people buying via their computers what they would previously have gone to shops for - physical shopping was far from doomed, the report said. “There is still a need and place for physical locations - the key is to ensure that synergies with online retailing are exploited to drive footfall to stores,” Verdict said. “While having an Internet presence is vital, giving the consumer choice by establishing strong links between the in-store and online offer is now essential.”
The development of faster broadband had made the process of shopping quicker and easier for many people, Verdict concluded, while many saw it as a way of getting cheaper prices. “The internet is widely perceived as a cheaper and easier way of finding lower prices and bargains in most sectors,” said Malcolm Pinkerton, Verdict’s senior retail analyst. “As the cost of broadband falls, consumers become accustomed to internet shopping and retailers continue to enhance their online propositions, the channel will find itself extremely well-placed to capitalise on the falling consumer confidence and lower levels of disposable income currently impacting the retail market.”
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