By  on May 14, 2007

Last year was a watershed moment for apparel online.

Apparel sales moved into the top spot online for the first time in 2006, overtaking computers but excluding travel, according to a report due to be released today from the National Retail Federation.

Last year, online sales of apparel, accessories and footwear grew 61 percent compared with the year before, according to the report. Forrester Research Inc., which conducted the study, projects growth will slow down this year to 21 percent. In 2006, Web sales of apparel, accessories and footwear reached $18.3 billion, and are expected to grow to $22.1 billion this year.

Retailers and analysts predict massive growth in online revenues in the category in the next five years. At the same time, competition is increasing and requirements to succeed are changing rapidly.

If the first decade of e-commerce belonged to the pure plays and the innovators, the second decade may well turn out to be the era of the established brands — particularly those with brick-and-mortar stores and deep pockets to keep up with the latest technologies to enhance the customer experience.

It's not enough to throw up a pretty Web site anymore, said Brendan Hoffman, president and chief executive officer of Neiman Marcus Direct. "You need proper customer care 24/7, phone calls, live chat."

Even though the pie is getting bigger, "there could be a shakeout for other reasons," said Rich Last, director of new business development for at J.C. Penney and a member of the NRF's board, which commissioned the study from Forrester. "This is such a quickly evolving business, you really have to stay ahead of it and on top of it — not just putting up a Web site, but continually improving and investing in it. Some will be better than others at it."

Established online players — including specialty sites such as Neiman Marcus and Net-a-porter, and department stores such as J.C. Penney and Macy's — report robust profits and growth rates of 20 to 70 percent in their online businesses.

Key reasons for the growth of apparel, accessories and footwear online are new sites, liberal shipping policies and rich imaging, according to Forrester.

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