Riding the online retail roller-coaster

2011 has started with a roller-coaster of reporting from retailers.

Nationwide it seems as though the dreadful weather took it’s predicted toll on the high street, with footfall down more than 3% on 2009 and some high streets left virtually deserted for days. There has also been profit warnings from HMV, Clinton Cards and Mothercare, whose future looks as bleak as the view out of the windscreens of cars stranded on the M25 last month.

The VAT and petrol duty increase is also adding to the uncertainty. Some retailers claim the combined effect will have a huge impact on high street sales, others are planning to swallow costs initially until the sales season is over and therefore rolling out price increases becomes less complicated, and others claim the effect on consumer buying habits will be negligible.

Whilst the high street has taken a battering over the Christmas period, online sales once again saw significant growth compared to the previous year. 44% of Britain’s online adult population upped their online spending this Christmas compared to 2009 highlighting convenience, stress reduction and cheaper prices as their top reasons for doing more shopping on the web (based on a study from customer experience management specialists, Tealeaf).

John Lewis claimed that Christmas Eve traffic alone was up 45% on the previous year, reflecting an early start to their January sale. And according to eDigitalResearch, 86% of the UK population used the Internet on Christmas or Boxing day (22% on a smartphone or tablet device).  This saw many retailers report record online sales over Christmas period.

A big contributor to record breaking online sales and the saviour of the bigger department stores across the land, has been the consistent growth in the luxury sector.

Many luxury brands have reported strong trading periods in 2010 and Mastercard reported that spend on luxury goods in 2010 was up more than 8% compared to 2009.  HSBC predicted that as the global economy evens out in the next couple of years the “new normal” levels of spend will see a demand for luxury increasing at double digit rates throughout 2011 and 2012.

This is in part supported by the huge demand from China, a trend that our MD Rosie saw first hand on her fact finding mission last year.  But it’s not just Chinese demand, HSBC predicts that “…high end consumers in America and Europe are willing to spend, even in a subdued economic environment”.

Smart retailers are also learning lessons from their consumers and competitors and taking the very look and feel of premium retail one step further and embedding it throughout the actual shopping experience. French Connection’s YouTique has taken the best bits of asos.com’s shopping journey and added elements that represent why consumers love luxury retail (personalised shopping experiences and attention to detail) and turned them into what is essentially a private online shop.

Offline examples of the trend are very much about more edgy premium brands and a better shopping experience.  Westfield East’s proposed 24 hour ‘lifestyle street’ which will feature stalls and boutiques of up and coming local cutting edge, limited edition fashion.  “Box Park”, the new concept in shopping opening in August in Shoreditch, will be a ‘pop-up mall built from shipping containers with short term leases offered exclusively to the less traditional premium retail brands such as Fred Perry, APC, Nudie and Religion.

We’re looking forward to a challenging but exciting year for our retail clients – with the traditional high street changing forever, online budgets growing and premium and luxury retailers looking for an edge, it’s going to be more important than ever to develop robust online retail marketing strategies, find creative solutions and make sure that all digital activity maps back to the bottom line.

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