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Online sales to rise, despite slower economy
Growth in web sales are expected to increase 17% in 2008, despite a sluggish economy that has affected the overall sales of many brick-and-mortar stores. This report, according to Yahoo News, is in stark contrast to the outlook that many traditional retailers have seen recently with the onset of higher gas cost, higher food costs, a weak housing market, and a weak job market. Online sales continue to be a bright spot in the retailing industry.
Retailers stepping up efforts online
As more retailers shift major efforts into their online presence, competition for online customers is increasing. This places even more importance of front-end enhancements, back-end functionality, and marketing. A recent study of online retailers indicated over 60% of merchants redesigned their E-Commerce sites in the past year. From a marketing standpoint the cost of online advertisement is increasing as there is more competition for search engine keywords. Targeted advertising and an emphasis on converting leads is a growing focus for online retailers.
2007 review for major retailers
Many major retailers in 2007 saw similar trends in their sales to those projected for 2008. According to Internet Retailer, Circuity City Stores Inc. saw a 12.2% decrease in store sales in December but reported a 40% growth in online sales for 2007. At Gap Inc., 2007 sales remained relatively unchanged from the previous year, yet online sales grew 24%. Staples online sales were up 14.3% (to $5.6 billion), while comparable store sales fell 3%.
Economic impact to online spending
Online retailers are not completely immune to the impact of a sluggish economy though. Households with an income over $100,000 spent 28% more last year compared to the year before, while households with an income of $50,000-$100,000 spent 17% more, and households under $50,000 spent 10% more.
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