E-tailers shun the Crunch
With the global credit crisis seeming to worsen day by day the retail sector is unsurprisingly apprehensive as the Christmas season approaches. So, why is it then that some online retailers seem to be sporting wry smiles as we enter the key final quarter of the year?
Whilst consumers are all too aware that hard times are on the horizon, the numbers that have been directly affected are still relatively low. Many of those who have not been directly affected are aware that they need to start watching what they spend, but not to the point yet where it is going to stop them spending completely – a situation that positively benefits many online retailers as the public go in search of bargains.
The popularity of online shopping in recent years has been largely associated with the consumer expectation that buying online is cheaper. With more shoppers than ever now hunting for a bargain this is leading to an increased potential market for online stores.
Of course, savvy buyers know that online is not always cheaper. Shopping online does though offer a convenient way to quickly compare prices between retailers. Specialist price comparison sites such as Kelkoo (www.kelkoo.co.uk) and Pricerunner (www.pricerunner.co.uk) are, as a result, seeing a significant increase in traffic.
According to Search Intelligence specialists Hitwise (www.hitwise.co.uk) UK Internet visits to retail price comparison sites increased by 20% between July 2007 and 2008 after being in decline for 2 years. (Source: http://www.hitwise.co.uk/press-center/hitw…editcrunch.php).
Whether these trends will continue if the economic situation continues to worsen is doubtful. They do though provide some cause for at least short term optimism for retailers, allowing them to utilise Christmas revenues to help shore themselves up against whatever 2009 will bring.
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What may give the online retailers a further boost is that more companies are moving away from paper based advertising and looking to the internet, so in theory, there will be greater exposure for companies with larger budgets. But this in turn may make life harder for the smaller eCommerce sites with lower budgets.
However, it is not all rosy, as both Amazon and eBay have reported lower than expected growth this year.