Online upgrades key to retailers’ survival

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Online upgrades key to retailers’ survival

Ian Grant

Retail IT directors will come under pressure to invest in their corporate websites after a surge in internet shopping over Christmas helped push total UK online sales up by 75% to £53bn during 2007.

Online retail analyst IMRG will warn in a report this week that retailers that refuse to sell online risk losing business as internet shopping heads towards capturing 50% of the UK's £300bn-a-year retail market by 2018.

The shift to online shopping will put retail IT directors under pressure to ensure their websites are easy and safe to use, and that their supply chains can deliver goods on time to the store and customers, said industry watchers.

"Getting the best from the supply chain is going to be a huge issue, especially as the internet enables people to leave shopping until the last minute," said Mike Goldiman, retail analyst at Pragma Consulting.

Christmas trading figures issued last week showed that the growth rate of internet sales had outstripped every other sales channel.

Sainsbury's chief executive Justin King said the supermarket chain's online operation had grown by more than 40% during the past quarter alone. "In the week before Christmas we delivered 90,000 orders, up more than 50% on the previous year," he said.

Marks & Spencer boss Stuart Rose said a new Amazon platform underpinned the firm's aim to take £500m a year in web sales by 2010.

"Online sales are up 60%, driven by significant improvement in traffic and conversion levels," he said.

Other large retailers said online selling was fundamental to their investment plans.

"Online sales and using our websites as an effective communication tool to customers are now pivotal parts of the brands' strategies," said Andrew Clarke, IT director at Arcadia, which owns Top Shop, Dorothy Perkins and Burton.

Harrods IT director David Llamas said outsourcing its online operation had allowed the retailer to meet rising demand. "This gives us the scalability and flexibility to cope with expansion, and our customers the guaranteed level of service they associate with Harrods," he said.

IMRG's report will say consumers spent nearly £18bn over the Christmas period, with about £84m spent online on Christmas Day alone.

● 17% of consumer spend on retail, travel and leisure takes place online

● Online shopping could take 50% of UK retail market by 2018

● 4.4 million Britons bought goods online on Christmas Day - a 269% increase on the 2006 figure

● Consumers spent a record £53bn online in 2007, up 75% on 2006

Source: IMRG/Capgemini

Marks & Spencer's online experience this Christmas shows the importance of e-commerce for large retailers:

● Post-Christmas sales up 78% compared with 2006

● Shopper registrations up by 20%

● 400,000 visitors on Christmas Day

● 620,000 visitors on Boxing Day




online retail highlights

M&S shows online growth


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