There is little doubt that online retail will have a real impact on the high street this Christmas. All observers appear to agree.
A survey of 3,000 consumers by eCircle, a supplier of software and services for digital direct marketing, considers how consumers will use the internet this Christmas and the results highlight the impact of online retailing, previously seen as the preserve of Web-savvy users, on traditional retailers.
What the survey indicates is that online retail is now considered a real alternative to the high street by consumers fired by the increased penetration that the widespread introduction of broadband has brought to the UK. It shows that 53% of UK consumers look set to buy at least one gift through the internet, while 60% say they would buy presents by mail-order or through an online shop of a mail-order company.
The objective of the study was to analyse the habits of shoppers at Christmas time including: if, how and where consumers research gift choices before purchasing; what products they intend to give this Christmas; which retail, online or mail-order companies they plan to buy from; and what they hope to receive themselves.
Argos, Boots, Woolworths, Marks & Spencer and Tesco top the list of high street retailers, while Amazon is the leading online retailer. Interestingly, both Argos and Tesco also feature high up on the list of favourite online retailers alongside Play.com and CD WOW.
Other traditional retailers that appear in the online listings include Littlewoods and HMV. The music retailer ranks eighth in both lists, underlining the success of its focus on building HMV as an online brand. This has been achieved by a proactive online strategy.
However all is not lost for traditional bricks-and-mortar retailers. Over two-thirds (62.7%) of people surveyed choose to research their Christmas gifts online, either through shopping and price-comparison sites or manufacturers’ websites, and then go into a store to make their purchases directly, and almost 10% of consumers rely on e-mail alerts for shopping guidance and special offers.
A comparative survey was run in Germany where the results show that while the majority of German shoppers will spend between €101 (£68) and €250 (£168) on Christmas gifts, their British counterparts will spend between £250 and £500. This perhaps reflects the importance of Christmas in the UK’s retail calendar and the position the “season of goodwill” has in consumers’ psyches.
Online auction sites seem to be much more popular in the UK than Germany, with 41% of respondents intending to shop for gifts on eBay compared to just 22% in Germany.
In the UK, the most popular gifts to buy are music (51%), books (50%), clothing (47.4%) and cosmetics (43.2%), and fortunately the gifts we most like to receive come from the same four categories.
The key findings from the study indicate that those companies which have invested heavily in an online strategy achieve a leading position among customers.
Argos and Tesco, which recognise the importance of an advanced digital strategy, have both developed a very strong online presence, which has allowed them to cross over from being a traditional retailer to a leading online store, with strong sales performances both on- and offline.
This seems to be leading to another market development with “click and collect” becoming an accepted way to buy. Argos has said more than half of the items sold on the internet are now collected at a store, with customers buying online on a Friday night and collecting their goods when doing their other shopping at the weekend.
The research highlights the importance of a strong online marketing strategy for traditional stores, either via an excellent website or a targeted newsletter mailing to drive consumers to both the online and bricks-and-mortar outlets – this is an important lesson for those yet to adopt such a strategy.
Despite all the advice about shopping early for Christmas, it seems there will be a December rush as only a quarter of respondents say they are well-prepared for the festive season, while 46% say they are unlikely be able to buy all the presents they need in one “fell swoop”.
The 13% of respondents who say they are unprepared and will buy at the last minute, will be delighted to hear that many online retailers say that shopping can be done up until December 22. It seems that even this close to Christmas if online retailers adopt the right online marketing strategy and use their databases effectively, there is still great opportunity to claim a fair share some of the estimated £7bn being spent online this Christmas.
•Volker Wiewer CEO of eCircle contributed to this week’s Trends Insight
Ian Davis, director of product strategy, ATG
E-tail is undoubtedly a mainstream success and it is essential that retailers understand the Web is no longer a standalone channel. Retailers now need to up the ante by investing in personalisation.
This research shows that multi-channel strategies are emerging as the future of retailing. Argos and Tesco’s position in the top ten lists of consumers’ favourite high street and online retailers shows a cohesive multi-channel strategy, brand recognition and power.
Being able to share information captured online will help build in-depth customer profiles. These will help retailers target consumers with relevant campaigns and ensure they are treated as a recognised individual with buying preferences and history.
The retailers highlighted in this research are becoming visionary multi-channel retailers, and I believe 2007 will see medium-sized businesses aiming to emulate them.