Online retailers are expecting to grow sales further in 2013, despite bitter competition, research published today shows.
A survey by Royal Mail of small and medium enterprises (SMEs) involved in online selling found two-thirds are confident that sales will increase this year, even though they believe competition is more intense.
The study comes after a new British record for online shopping was set on Boxing Day, when there were 113 million visits to online retailers, about 30 per cent more than last year.
Britain’s total retail spend is forecast to grow only in line with inflation in 2013, to around £300 billion, leaving retailers to fight for a larger share of the market if they hope to expand.
The proportion of shopping done online is expected to continue growing, but respondents to the Royal Mail survey said the increase in the number of websites selling goods and price- sensitive customers are key factors fuelling the increased competition.
To respond to the challenge, priorities for SME online retailers in 2013 will be increasing customer satisfaction by improving the range and quality of products they sell, pricing more competitively and focusing on improved delivery and returns processes.
The rise in people using smartphones and tablets to buy goods increasingly means shoppers are using retailers they already know rather than shopping around, so 35 per cent of SME online retailers are planning to develop mobile apps in 2013. Currently, only 10 per cent said they have already done so, the survey found. Nick Landon, managing director of Royal Mail Parcels, said: “Our study shows that online retailers are responding to the needs of shoppers to grow sales in an increasingly competitive marketplace.”
The growth of online shopping is seen as a major factor in the problems facing many high street retailers. Recent research by business analytics firm SAS showed that the market share of online firms has gone from just 0.2 per cent in 1998 to 10.5 per cent in 2012. It is predicted to rise to around 11.7 per cent this year.
Online sellers already dominate the music and video market and look set to surpass “bricks and mortar” sellers for books, too, in 2013, capturing almost 53 per cent of the market. Early reports suggest retailers of all description faced a battle of wills with consumers this Christmas in order to persuade them to part with their money. Many stores were forced to start their sales early, with some resorting to discounting even before Christmas Day.
However, perennial outperformer John Lewis has already unveiled sales of £157.8 million for the week to 22 December, an increase of 26.5 per cent compared with the same period last year, while the employee-owned department store chain said that online sales were up 40 per cent on Christmas Day itself.
However, after a difficult year for the high street, which saw the likes of Comet, JJB Sports and Peacocks call in the administrators, the British Retail Consortium is predicting little or no growth in total festive spending once inflation is taken into account.
The first signs of how Britain’s listed retailers fared over the crucial Christmas trading season will emerge tomorrow when Next updates the City on its performance.
Next, the UK’s second-largest clothing retailer, is due to deliver a fourth-quarter trading update on Thursday, and Peel Hunt analyst John Stevenson is forecasting full-year pre-tax profits towards the upper end of the £590m-to-£620m range set by the chain in October.
