Reports Say E-commerce Sales Still Rising

Two reports last week affirmed sales are still growing online, despite the weak retail picture elsewhere.

Two reports last week affirmed sales are still growing online, despite the weak retail picture elsewhere.

This story first appeared in the October 28, 2008 issue of WWD.  Subscribe Today.

U.S. online retail sales during the holiday period will reach $44 billion, Forrester predicted, a 12 percent increase over last year — but also “the slowest growth rate to date,” the report said.

Meanwhile, the best way to reach the ultrarich luxury consumer is online, according to a survey of 1,000 wealthy consumers funded by Google and conducted by Pam Danziger’s Unity Marketing in June.

“While consumers remain pessimistic about the health of the U.S. economy, online shopping drivers of convenience, selection and perceived value will continue to attract buyers to the Web this holiday season,” said the Forrester report. Slightly less than half of online consumers said they plan to spend less this holiday season, up from 20 percent the year before. In the apparel and accessories category, only 9 percent said they plan to spend more this year than last year, down 1 percent from the year earlier.

At the same time, there are upsides to e-commerce: 48 percent of online shoppers said they can find the best deals online, compared with 41 percent last year. And 36 percent of consumers said they would be more likely to shop online because of high gas prices, versus 22 percent last year. Three-quarters of respondents prefer to shop at retailers that offer free shipping, and 58 percent said shipping charges deter them from buying online.

Overall, Forrester predicts online retail will reach $200 billion this year, with much of that coming in the fourth quarter.

Many luxury shoppers prefer to buy online. “They’re wealthy but they don’t have a lot of time,” said John McAteer, Google industry director for retail. Forty-five percent of ultraaffluents, defined as those with household incomes over $250,000, said they prefer to shop online rather than in a store. Fifty-six percent of those whose yearly income exceeds $1 million said they prefer online shopping. Only 7 percent of ultraaffluents and 5 percent of millionaires said they enjoy shopping online less than in the store. Seventy-five percent of respondents said they had shopped both online and in stores in the last six months.

The wealthy have a keen interest in designer clothing, with 79 percent saying they purchased designer clothing online in the past six months, and 50 percent saying they had bought it in the store. Similar numbers had purchased high-end accessories, jewelry, electronics and home furnishings online and in store, with 70 percent reporting they had bought fine jewelry or watches online in the past six months.

They said the Internet was the most helpful source to learn about luxury products and brands (82 percent), closely followed by word of mouth (78 percent) and magazines and in-store displays (68 percent). Slightly less than half cited personal shoppers.

It seems luxury shoppers would appreciate having more of their favorite brands available to buy online, since 64 percent said they “often get frustrated if I can’t find an item I saw in-store on the Internet.” Many (59 percent) said they often go home and purchase items online that they saw and liked in the store.