13 Jan 2010
Following a tough 2009, consumers are still watching the pennies, but despite this the pre-Christmas period saw a significant increase in online sales, with retailers posting impressive figures for the last quarter.
Sales on John Lewis’s web site, relaunched early last year, were 14 per cent up on 2008’s total, as the chain’s conservative customer base grew more comfortable with the idea of shopping online.
Meanwhile, announcing Marks & Spencer third-quarter results last week, chief executive Stuart Rose said the company had improved its online market share by 32 per cent, despite seeing fairly flat results for in-store sales.
Online grocery store Ocado saw its sales increase by 49 per cent in the week leading up to Christmas, reaching £8.9m. Like for like sales in the four weeks ending 26 December were up 30 per cent on 2008, to £40.8m.
Online and home shopping group Shop Direct posted total sales up by 6.3 per cent year on year for the six weeks to 1 January, with its online shop being the strongest performer in its portfolio.
And this growth looks set to continue, with most big retailers predicting that online sales will account for between 30 and 50 per cent of total sales over the next two to three years, while some companies such as Argos are already seeing 40 per cent of their sales coming via the web.
It is also believed that more than 90 per cent of sales research will be done using either the internet or mobile phone, with customers visiting fewer web sites than they would stores if shopping on foot. With all this in mind, experts say it is essential that the top retailers make the most of their online offering.
This is particularly important since as the market has matured, conversion rates have fallen by four to six per cent year on year, with more customers using the web solely to compare prices. This trend is forcing e-retailers to adapt the technology to enhance their online offering.
New technologies
Innovative retailers are adopting a number of technologies that enhance their online offering. Clothes retailer Boden uses imagery that lets the customer zoom in and look at the texture of fabrics.
Retailers are also hot on interpreting customer activity online; where a user has abandoned a basket, the more sophisticated sites such as Sainsbury’s will show a pop-up box asking whether the customer needs help with their purchases or offering instant messenger chat with a customer sales rep.
Many retailers are using social networking sites to their advantage, with Top Shop and others using retail Facebook pages to target young people. One third of movement away from social networking sites is into a retail site.
Companies looking to harness Twitter as a tool will make product launches via the service and hope to see these re-tweeted by interested parties. These methods are used to generate traffic and reinforce brand via a “community”.
According to Chris Webster, head of retail at technology consultancy Capgemini, 2010 will see at least four of the top 10 UK retailers with older web platforms overhaul their sites completely.
“They need to be able to offer multi-channel integration, a service that connects the web with a contact centre and mobile services,” he said.
Tesco launched such a service last summer using web integrator ATG’s technology to connect all its sites and unify customer interactions across the web, email, live agents and mobile devices.
These players will want a private platform, but will have services such as “click to call” or “click to chat” hosted in the cloud.
Webster predicts that all retailers will make more use of mobile services now that many customers have decent-sized screens, and e-wallet devices in mobiles will start to become part of the multi-channel structure. Capgemini also conduc ted trials of near-field communications (NFC) technology in several stores in the third quarter 2009. NFC technology, which is used in Oyster cards and by smart PIN provider payWave, allows shoppers to purchase products in store via a chip embedded into a mobile phone that authenticates the user and personalises their shopping experience. The company expects the technology to be adopted by retailers within the next three years.
We are seeing various technological advances across fashion retail, such as virtual mannequins in a similar way to Atos Lombardini.
The problem is not so much technical as a lack of any agreed standards. It is hard to be sure that a size 12 in one high street chain is the same as in another. To get agreement on standard sizing of virtual clothes on avatars is a big challenge. It is also easy to imagine brands being tempted to 'tweak' their software to make their garment look better than the other brand.
A more immediate and practical technological development is where customers see a style they like online and can then click through to see if it is available to try on at the local store. Perhaps the garment in store is a different colour, but they can still see if it fits. This may sound like an obvious capability, but surprisingly only about one in five sites offer this option, often because the website doesn't have good integration into the head office retail system.
An automated and fast interface with all other systems is very important and can be easily overlooked when thinking about an eCommerce system.
Posted by: Sam Jackson, Chief Executive, Prologic 21 Jan 2010
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