eTail is a £20 billion recession beater
By Davey Winder in Editorial
Posted in Economy, Blog, Internet, e-commerce on
Recession, what recession? That seems to be the message that Internet shoppers are giving loud and clear. Online spending is growing by £2.4 billion this year, with e-Retail spending set to hit £20.9 billion by the end of the year. That’s a growth rate of some 13.3 percent over the previous year.
A new report from Verdict Research admits that Internet sales are actually starting to slow and become more competitive as a market, online retail is still set to hit £31.2 billion by 2013 which would be a 10 percent slice of the total retail spend.
Verdict says that through 2009 the overall total retail growth will contract by 0.6 percent courtesy of consumer spending being ravaged by the recession. During the same period the online market will continue to expand, driven by a continued increase in Internet shoppers with a higher expenditure per head. This follows on from the trend of 2008 when there was a 1 percent increase in Internet users and an 18.1 percent increase in online shoppers, both spending an average of 5.8 percent more than in 2007.
It should be noted, however, that while online growth in 2008 represented a substantial out performance of wider retail it was not all good news historically speaking: this was the smallest rise in the channel’s sales since bursting of the dotcom bubble back in 2002. Verdict reckons the growth rates will continue to fall over five years as penetration of the population begins to level out.
“The key for individual retailers is to formulate two clear strategies, one for succeeding through the recession and one targeting growth beyond this, as the online channel begins to approach maturity,” says Malcolm Pinkerton, Senior Retail Analyst at Verdict Research and author of the report. “Those with less money to spend are turning to the internet to search out bargains on branded items like electricals,”says Pinkerton. “Additionally, the more affluent groups, who do still have money to spend, continue to appreciate the internet for its convenience, making the channel doubly resilient to the downturn.”
That said, there is some evidence that those with the least money are turning to cheap and chavvy high street alternatives such as Primark, Matalan, Poundland for their clothing and lower priced household items. “But overall this is being more than outweighed by increases in bargain hunters looking for larger, branded items and the loyalty of those most financially comfortable consumers who continue to value convenience over price” Pinkerton concludes.
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