Internet retailing still expected to advance in 2009
While red pens have been taken to many of the forecasts made
before Lehman Brothers collapsed and took the banking crisis global,
internet retailing is expected to be one of the least affected channels.
While grocery retailing is expected to show minimal growth in value
sales in 2009 and 2010 and the non-grocery channel could shrink be-
fore showing a small increase in 2010, non-store retailing overall is
likely to grow by between 3.5% and 4.5% in both years, with internet
retailing playing a big part in the channel's continued health.
Growth expected to rise ...
In 2009 sales growth in internet retailing is likely to be driven by
similar trends seen in recent years: convenience, competitive pric-
ing and consumers' ability to compare prices across a number of
channels. With pricing becoming an increasingly important factor in
consumers' buying decisions, so the channel should benefit.
The notion of convenience is increasingly being linked by consumers
with the idea of saving money, not only in terms of lower prices, but
also in not paying for the petrol to get to the store. In the UK, growth
in internet retailing in 2009 is expected to be driven by consumers
outside the country's largest cities, with people benefiting from the
low cost of delivery being offered by retailers.
In established markets, like the UK and US, large-scale e-commerce
and multi-channel retailers are likely to leverage their buying power
in an attempt to undercut prices available at competitors. In the UK,
Tesco and Asda have both pushed into the on-line environment in a
big way, promoting their non-grocery product ranges. Utilising the
purchasing power inherent in their group companies (Asda is owned
by Wal-Mart), they have both been able to price goods so aggres-
sively that they are able to compete with established large-scale,
non-grocery retailers like Home Retail-owned Argos.
This point becomes increasingly important as large-scale companies
utilise their marketing budgets to promote their e-commerce sites
and offer money-off promotions and discounted delivery charges as a
way to tempt consumers on-line. In the US, searches for on-line cou-
pons have more than doubled since the beginning of the recession in
the country, with on-line aggregators bringing together the best deals
for consumers looking for an easy way to garner the best prices.
In a similar way, price comparison websites have seen strong growth
during 2009. These sites enable consumers to evaluate pricing across
a number of companies, thus providing shoppers with a greater level
of pricing transparency. As consumers look to save money, these sites
are enabling them to do so, while also forcing retailers to compete
Page 56 ISN JUNe 2009
ISN Online Version. www.internationalsupermarketnews.com
Channel Watch: Will the
internet escape the
retailing downturn?
While retailers operating in the majority of channels
now concede that the global economic downturn is
having an effect on sales, internet-based companies
remain conspicuous by their absence in terms of
complaining about a drop off in sales. In the US, two
electronics specialists that have failed, CompUSA and
Circuit City, have seen their brands survive on the
internet, underlining how the internet is increasingly
becoming a home for famous brands that have seen
their brick-and-mortar stores fail. Ultimately, there-
fore, can the internet channel continue to grow in the
face of the current economic difficulties
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