Decrease in Growth for Online Retail is Just a Blip

Seasonal trends can often be misleading, but are particularly important to understand when deciding on budget allocations. For example, higher marketing budgets are usually spent during the final quarter in the lead up to Xmas than during the first quarter when shoppers are less inclined to splash the cash. It has been reported that monthly growth in online retail fell by circa 22% from December 2009 to January 2010, which although is in keeping with the historical trends of lower sales in January, it is at the same time a much greater decline that in previous years.

This statistic can also be deemed to be rather misleading however, as a number of factors have been used to explain the decline. One encouraging explanation is that December was a particularly strong month for the online marketing industry, meaning the come-down in January was inevitably even greater than before. The increase in VAT along with less discounts (due to lower volumes of over-stock) also help to explain the decrease in growth in January, thus it’s important that this statistic is taken with a pinch of salt.

In fact, further promising trends have recently been revealed as research from the British Population Survey states that ’48.7% of adults made purchases over the internet during the last quarter of 2009’, up 3.3% from the previous year. The much anticipated rollout of ‘universal broadband’ is also unquestionably going to help to boost online retail sales, although the Digital Britain Universal Service Commitment is unlikely to be realised before 2012. Regional trends are also starting to shed some light on online shopping behaviour, as it has been revealed by the Centre for Retail Research that UK shoppers spent more online than anywhere in Europe, while research in India shows that more teens are being increasingly tempted by huge discounts available from certain clothing sites.

It’s clear that online is the future of the high street, and although growth has slowed down in the last month, online retailers and marketers should not be too worried about the recent blip. User behaviour and trends point to further increases in growth for online retail in the year 2010, though this may not be such good news for those high street outlets with a limited online presence. The onus is on high street stores to embrace online retail and do all they can to stay afloat by transferring their presence from bricks and mortar into the digital arena.