NielsenWire: Online shopping population may shrink this year





For the first time since 1999, when the U.S. Commerce Department started tracking online sales, 2008 and 2009 reported quarter-to-quarter and year-to-year retail e-commerce sales decline. Additionally, a Nielsen survey reports that the online shopping population may shrink this year. In 2008, 71% people of people planned to do holiday shopping online. This year, that number drops to 63%.
HolidaySalesOutlook_Charts_2
Those determined to shop online expect to spend significantly less this holiday season.  In 2008, 42% of shoppers planned to spend more than $300 on their online holiday purchases, but this year only 31% intend to spend that amount. Not only are consumers spending less money online, but they are planning to spend a smaller amount of their total holiday budget online compared to brick and mortar stores.

Changed perceptions
The Internet may have lost its cache as a value channel. While consumers still shop online for money-saving reasons, the top two motivations for shopping online focus on convenience. Almost 70% of consumers enjoy the all day/all night benefit of shopping, whenever they like and 57% shop online to avoid holiday crowds in stores.
HolidaySalesOutlook_Charts_3
The top items consumers plan to shop for this holiday season include toys and video games (40%), clothes, shoes and accessories (39%), movies (38%), books (37%), gift cards/certificates (35%), music (29%), home electronics (23%), computer hardware and software (17%) and jewelry, health & beauty products, gourmet food/gift baskets (14%).

However, most product categories are expected to see lower levels of spending compared to 2008. Gift cards/certificates and movies are the only categories expected to grow this year. Movies are benefitting from the trend towards in-home entertainment and the dropping prices of Blu-ray technology. The growth of gift cards is likely attributed to the recession—gift givers are aware that needs, as opposed to wants, will be greater this season. In addition, more people (55%) would rather receive a gift card rather than a purchased gift.



Barriers to online success
While convenience and money savings factors are clear benefits to shopping online, the fact is, less than 4% of all purchases are made online. A Nielsen survey found shipping and handling charges are a major deterrent, with 53% of consumers stating they will not buy all their gifts online to avoid this fee. More than half (51%) of consumers cited that they need to see or touch the product. Consumers reported many of the physical benefits of in-store shopping—ease of return, instant gratification, access to sales people—as reasons they will not shop online for holiday gifts.

While the majority of purchases are made offline, the Internet is playing an important role in purchasing behavior. Deal-seeking activities—like comparing prices and finding coupons—drive consumers to go online first before ultimately making an in-store purchase. Deal-oriented websites attract a sizeable and varied audience—not just those with lower household incomes. In general, online deal-seekers tend to be female between the ages of 25–50 years old coming from a wide range of income levels.

Talk it up
Social media has changed the way consumers seek and share online and offline holiday deals. Frugal shoppers actively rely on these sites to learn about where to find the best deals, product recommendations, gift ideas and money saving tips. Retailers have an opportunity to go beyond traditional TV and printed circulars and use social media outlets to get shoppers excited about their holiday deals. Shoppers enjoy being the first to find out about a deal and share it with their network. Many retailers are using social media to drive traffic on Black Friday.

There’s still time
While Internet sales will not be the salvation for most multi-channel retailers this year, online announcements of deals through retailer websites and social media networks can improve share for their brick and mortar stores. Multi-channel retailers must use their websites and physical locations as differentiation, helping shoppers find the right product effectively, ensuring a simple purchase fulfillment and return policy and providing excellent follow-up support. The Internet may not be seen as a value channel, but it is seen as a value media.

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