On Internet Business

Online retail up – general forecast down

Posted by Michael under Business Growth, Online Retail

The Capgemini index shows that online sales have remained robust, with the total online retail sector being up 13% on April 2009. There’s been a wobble for online travel – related in part to the ash cloud – and evidence that recession-aware shoppers are still keen to spend on their homes and gardens for summer.

In April 2010 online consumers spent 9% less than in March on travel, a growth that is slower than market average, but online clothing rocketed with a 21% spend increase compared to last year. Discounting of beers, wines and spirits in the last weeks of the April also caused a sharp rise, as consumers ordered in their booze for the early and late May bank holiday weekends and the World Cup.

Sales for retailers with both online and store locations are up 22% on 2009, compared to a sales increase by only 6% on the same month for those who have physical locations only.

So how does this sit with the report ‘Internet retail trends 2010: Ten actions for your business’? The report was compiled for Webloyalty, by Verdict, and it says that despite growing by 13.3% in 2009, online retail has been hard hit by the recession.

Key findings of the report

• Growth will be harder – easy successes have now peaked and future progress will be slower and harder won, with more switching of customer loyalty rather than new customers meaning that retailers should focus on maximising revenue online

• Acquiring new customers will become a challenge – maintaining existing customer loyalty and developing systems to create repeat business are likely to be key features of successful online retailing in the years ahead.

Does the index bear out the predictions?

It’s too difficult to tell how accurate the long term forecasting is yet, and supra-national issues like oil spills and ash clouds have unanticipated effects on retail (eg we can expect tent sails to rise as Brits who would have holidayed in Florida etc opt to remain home and avoid both disasters) but there does seem to be some evidence of a slow-down in new customer gain which could suggest that the most successful future online retailers will be those who hold onto their market share and persuade those customers who’ve bought once to buy again.

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