SAN JOSE, Calif. – Online retail spending may show healthy growth this year.
But it’s not clear if those are sales that diminish spending at brick-and-mortar stores, where many retailers are most worried about revenue declines in a slowing economy.
A study released Tuesday by Forrester Research for Shop.org, a division of the National Retail Federation, projects that U.S. online retail sales will grow 17 percent this year, to $204 billion. Growth was 21 percent in 2007, totaling $175 billion, according to Forrester.
But Forrester senior analyst Sucharita Mulpuru said it’s “a good question” as to whether those sales are a trade-off for lost business at brick-and-mortar locations.
“Many retailers would rather have a sale in stores than online,” said Mulpuru, the lead author for the report. “The bulk of their business is their store business.”
The San Jose Mercury News contacted a variety of retailers with notable online operations. Best Buy declined to comment; JC Penney did not respond, and Williams-Sonoma said no one was available Monday.
But a spokeswoman for Shop.org said feedback from its members indicates retailers regard online sales as equally desirable.
“What we hear from multichannel retailers (i.e. ones with stores and Web sites) is that they truly do not care which channel you shop, as long as you shop with them,” Ellen Davis wrote in an e-mail. “People who buy online are just as likely to make impulse purchases, become a loyal shopper, tell their friends about their experiences, etc., as those who buy in the store.”
Among the issues highlighted by the report, said retail expert Steven Keith Platt, is the need for retailers to closely link their Web and brick-and-mortar operations.
Platt, director of the Platt Retail Institute consulting firm near Chicago, noted that the report shows online sales of autos (and auto parts) will amount to only 2 percent of all U.S. retail sales in that category this year. By contrast, noted Platt, his automotive clients say that as many as 70 percent of their customers do all their research online before shopping for a particular car at a dealership. “Retailers need to translate that into a better shopping experience – say with handheld devices for the tech-savvy to continue using in the store – to close the sale,” said Platt.
Mulpuru said security concerns – particularly regarding identity theft – have been decreasing as a concern for online shoppers.
At the end of 2004, said Mulpuru, a Forrester consumer survey indicated that 28 percent of people online said they had never shopped online. Of those, 62 percent said they didn’t want to provide personal information over the Internet.
But by early 2007, added Mulpuru, only 12 percent of people online said they had never shopped online. Of those, 44 percent said they didn’t want to send personal information over the ‘Net.
The report released Tuesday – “The State of Retailing Online: Marketing Report” – projects apparel, accessories and footwear as the No. 1 online category, generating $26.6 billion in sales this year, up from $22.7 billion in 2007. The No. 2 category is computer hardware, software and peripherals, projected to reach $23.9 billion, up from $20.7 billion.
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