A belated Happy New Year to everybody. While we read about the struggle retailers continue to face on the High St; online retailing is set for another year of bumper growth. According to IMRG, the trade body for internet retailers, £367 million was spent online the day after Christmas in 2010! Furthermore, Britain is now top of the international rankings for internet commerce, with 9% of sales being conducted online.
Online retail landscape looks bright:
And this trend is set not just to continue but to grow. Bain & Co. forecast that by 2020, 95% of music and 75% of books will be sold online. And even luxury goods, reticient at first to embrace the internet given the lack of advice from trained sales staff they could give to customers, are now enjoying significant sales growth derived from online transactions. A greater proportion of luxury fashion is sold over the internet than mass-market clothing, which is testament to just how much mindsets in the luxury goods industry have shifted.
Multichannel results in greater value transactions:
This is all achieved without mentioning m-commerce. Mobile phones are increasingly being used to research purchases before consumers hand over cash in stores or online. About 20% of sales in 2010 were classed as multichannel, meaning that orders were picked up in store or goods were ordered online after research in a traditional shop or showroom. Deloitte recently published research showing that multichannel customers spent an average £143 per transaction compared with £57 for traditional store customers.
So for those retailers vulnerable to online competition, the future does not look particularly bright. Moreover, research has shown that the more consumers shop online, the harder it is to sell at a healthy premium. This explains much of the trouble for the likes of HMV, and retailers of electrical goods such as Comet and BestBuy.