Defying the slowdown
Verdict Research’s UK e-Retail 2008 reports internet shopper numbers at an all time high and online spending growing at its fastest rate for six years. In 2007 online spending by consumers on retail goods grew 35 percent to £14.7bn.
Total retail growth was only 3.6 percent in the same period. The report predicts online retail sales will reach £44.9bn, about 13.8 percent of total spending, by 2012.
During 2007 the number of internet users increased 5.9 percent to 33.1m, but online shopper numbers increased 24.7 percent to 22.6m. The report found shoppers buying an average of 16.9 times per year, up from 14.2 in 2006, and spending an average of 7.8 percent more.
While a degree of “cannibalisation” and shop closures was inevitable, “there is still a need and place for physical locations,” said the report. “The key is to ensure that synergies with online retailing are exploited to drive footfall to stores
“Retailers have been telling us they are feeling the slowdown in the housing market feed through to footfall and spend per head on the high street,” said a spokesman for Barclays Commercial Bank, which commissioned the report.
Making better use of leisure time was the main reason for shopping online given by the 4,059 adults interviewed, while more than half cited convenience. A key factor was the increase in broadband access at home, from 30 percent in 2006 to 55.5 percent in 2007.
The falling cost of broadband had brought larger numbers of C2 and DE shoppers online. C2 shoppers increased by 35.5 percent to 4.2m, and DEs by 38.9 percent to 2.5m. Although the AB bias persists, their number only increased by 23.2 percent, while the C1s only increased by 19.3 percent.
Online shopping for electricals and groceries were at about 25 percent each, with online grocery shopping growing faster and on course to reach 29 percent by 2012. Music and video retailing had the highest online penetration, with internet sales making up 30.8 percent of total sector sales.
Verdict estimates that online sales will account for over two thirds of the music and video market by 2012, while electricals, the sector with the next highest penetration, will see its 15.1 percent penetration more than double in the next five years.
Men continue to make more online purchases and to spend more. “The nature of the channel renders it attractive both to inherently lazy male shoppers,” said the report, “and to the increasing number of fashion savvy and brand aware men who find it easier to get what they want online.”
