Belfast Telegraph

Saturday 30 August 2014

Retailers left in the cold as the internet reigns supreme

The good news is online shopping is more popular than ever. The bad news is the High Street is taking a battering, says Donald C McFetridge

It's the season when we're supposed to be jolly and, hopefully, go shopping - no matter how bad the financial situation might be. But this year, our Christmas shopping behaviour is going to be significantly different from previous years.

That is, if you believe new research from accountancy firm Deloitte, which is forecasting that consumers will increase their spending by just 1% this Christmas - in spite of a jump in online shopping.

Deloitte is predicting that, while UK retail sales this year will grow by a modest 1%, our online shopping behaviour will increase by an astonishing 17%.

Ian Geddes, UK head of retail at Deloitte, said: "We remain cautious on the long-term outlook for UK retail, but there are more reasons to be optimistic than pessimistic this Christmas."

During the course of the year, consumer confidence has improved (albeit marginally) and, in spite of the recent increase in inflation, it is still much lower than it was 12 months ago, thus easing pressure on many households.

However, it is far from certain whether or not this will, in fact, translate into higher spending right across the board over the Christmas/New Year period.

There is still a trend among consumers to show a desire to save, as employment prospects for many remain insecure.

Deloitte believes that online consumers will spend £330m on Christmas purchasing directly on their smartphones - a growing trend - and a further £500m via tablet computers. The online market will witness unprecedented growth, with purchases completed on mobile devices double, or even triple, that of last year.

Modern consumers are beginning to witness the tremendous power of social commerce and more consumers than ever before are now, as a matter of course, using Facebook and Twitter to share reviews of their purchases, special offers and product information. At the same time, far-sighted retailers are also starting to use social media to their advantage in a constructive manner as a forecasting tool and in order to monitor 'buzz' around certain products.

This helps them to better manage store inventories and predict consumer demand more accurately.

However, it's not all good news. Another survey has found that 61% of participants would form a negative opinion of a brand if the retailer's website performed poorly.

Riverbed Technology, which conducted the survey, predicts that as many as 45% of consumers are planning to spend more time shopping online in the run-up to Christmas, compared to last year.

The survey also found that more than half (55%) of consumers now prefer to shop online rather than in-store (for a wide variety of reasons).

The average consumer is likely to spend an average of 42 minutes every day shopping online in the run-up to Christmas Day and into the New Year.

Some consumers are worried about delivery times and I personally have witnessed a 10-day wait for merchandise which was supposed to be delivered within two to three working days.

The Riverbed study reinforces this concern, with 69% of those surveyed admitting that they would feel "uncomfortable" making payments on websites which were slow, or difficult to load, fearing that goods might arrive late, or not at all.

Both surveys are positive that consumers will spend and that there is more reason to be optimistic than pessimistic, but the High Street looks set to take a battering if their predictions come true.

Historically, the shepherds brought "glad tidings of great joy"; whether or not retailers can do the same this Christmas remains to be seen.

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