Online retail growth slows

Conversion rates plunge as recession hits web spending, says research

Cash-strapped consumers are using the web for "window shopping", says IMRG

Online retail growth in the second half of 2009 is likely to be less than previously forecast, with expert estimates revised down from 15 per cent to 12 per cent.

According to the IMRG Capgemini e-Retail Sales Index, the update has been prompted by slowing growth in June, as web sales fell by 1.3 per cent compared to May.

An noticeable development over the first half of this year was shoppers’ inclination for “window shopping”, with conversion rates – the number of purchases per visit – plunging from seven-to-eight per cent in 2007 to four-to-five per cent in the first six months of 2009.

But the slower growth rate is “in line with the longer term historical trend”, says the report, adding that web shopping amounted to £22.9bn over the period.

“The online sales results for the first half of 2009 show a slight slowing of growth, as the recession weakens consumer spending on the web,” said Mike Petevinos, head of consulting for retail at Capgemini UK.

Petevinos said online retail growth is set to continue for the rest of the year, so the main area of concern for retailers should be how well set up are they to take advtantage of the positive predictions.

“Greater levels of competition and an increased propensity of consumers to research before they buy will put pressure on conversion. However, this level of decline highlights a clear opportunity for retailers to improve customer experience through their online stores in order to capture their purchases,” he said.